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Global and Stochastic Analysis Vol. 5 No. 6 Special Issue 2018 MUK PUBLICATIONS RESEARCH ON CONSUMER BEHAVIOR OF WINE IN VIETNAM HA NAM KHANH GIAO, PHAM NGOC DUONG AND TRAN NGOC TU Abstract: This study was conducted to find the factors affecting the consumers choice of wine in HoChiMinh City, Vietnam. The multiple regression model was not statistically significant for finding the relationship between the factors and the amount of Money spent on wine, so discriminant analysis method was used to evaluate the contribution of factors to the differentiation between consumers group presented by average number of bottles consumed per month. The Symbolic benefit factor turned out to be the strongest, followed by Enjoyment benefit factor and Utilitarian & Experiential benefit factor. The findings make an attempt to provide some suggestions for wine marketers in Vietnam market Introduction In general, the 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, the demand for wine in Vietnam was high for many reasons. Although the price of a bottle of wine is possibly higher than that of a carton of beer, there have been more and more affluent consumers changing their preferences and making the consumption of wine increased due to their belief in health benefits of drinking wine). Second, the 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. (Euromonitor International, 2010) Vietnamese alcohol market is a profitable one because alcohol is designed as one of the fundamental parts of socializing in Vietnamese culture and most of Vietnamese men drink. During weekdays, Vietnamese people may go out to drink at bars, pubs or restaurants with their friends after work. Some invite their friends to drink with their families at home on weekends. In addition, younger generations including young women are now more open about drinking; for them, it can be seen as another way of socializing. Moreover, as they have become more independent, dynamic and can make more money themselves, drinking alcoholic products has become more common in their lives (Euromonitor International, 2010) There are two types of wine regarding the quality in the wine environment in Vietnam. Low quality wine is widely sold through street shops and supermarkets High quality wine is mainly distributed through restaurants, hotels and sold at Keywords: consumer behavior of wine; symbolic benefit; utilitarian benefit; experiential benefit; enjoyment benefit Electronic copy available at: https://ssrn.com/abstract=3695870 112 HA NAM KHANH GIAO, PHAM NGOC DUONG AND TRAN NGOC TU high prices to the consumers with good knowledge of wine. The fact is that, the preference for foreign brands has long-existed in Vietnam. 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, Chilean and Australian one 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. The Vietnamese consumers are facing many types of wine from local non-grape wine to imported wine with very high prices. These wines also vary in the region of origin, packaging and quality Moreover, wine is quite a complicated product, and the perception of wine quality of the consumers is much diversified. So far, the wine producers, importers and distributors have not invested much in marketing and communication activities 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. This study will explore and evaluate a proper model for the wine consumption of Vietnamese people Literature Review 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 items in use, which directly impacts upon the probability of repurchase (Alba et al. 1991) There are various consumers models which help in the understanding of consumer behavior. The Economic Model, Psychological Model and Sociological Model are quite simple. The Economic Model assumes that consumers follow the principle of maximum utility based on the law of diminishing marginal utility. The Psychological Model explains the causes which lead to purchases and decisionmaking based on the hierarchy of needs. The Sociological Model is concerned with the society, in which consumer buying behavior is influenced by groups. The Pavlovian Learning model, Howard 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. The Howard Sheth Model is slightly complicated and shows that consumer behavior is a complex process and concepts of learning, perception and attitudes influencing consumer behavior. The Engel-Blackwell-Kollat Model consists of four components: Information processing, Central control unit, Decision process, Environmental influences. The Nicosia Model explains the consumer behavior on the basis of four fields Electronic copy available at: https://ssrn.com/abstract=3695870 RESEARCH ON CONSUMER BEHAVIOR OF WINE IN VIETNAM 113 Input, Process, Output Model (Schiffman & Kanuk 2004) 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. The input stage influences the consumers recognition of product needs and consists of two major sources of information: the firms marketing efforts (the product itself, its price, where it is sold and its promotion) and the external socio-logical influences on the consumer families, friends, neighbors, other informal and noncommercial sources, social class (classes), and cultural and sub-cultural memberships). The process stage focuses on how consumers make decisions. The inherent psychological factors in each individual (motivation, perception, learning, personality, and attitudes) affect how the external inputs from the input stage influences the consumer 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 existing psychological attributes. The output stage consists of two closely related post-decision activities: purchase behavior and post-purchase evaluation. Taking into account the fact that there has been no research on this field so far in Vietnam, the Input, Process, Output model is selected to be the fundamental to form the conceptual framework of the study 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 gathered and processed as determinants of consumption behavior. This includes, for instance, the stream of work based on Fishbein and Ajzens 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 consumers are seen to be very much cognitive analysts 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 were developed. The first, stemming from a psychological perspective, came from the work of Dichter (1964), later developed by Levy (1981) 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 was suggested by Richins (1994) that the symbolic use of consumption can be split by separating representations of interpersonal ties from identity and self-expression In the early 1980s, a second paradigm was developed which contrasted utilitarian with experiential and hedonic consumption (Hirschman & Holbrook 1982 Holbrook Electronic copy available at: https://ssrn.com/abstract=3695870 114 HA NAM KHANH GIAO, PHAM NGOC DUONG AND TRAN NGOC TU & 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 engagement with the products 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 engagement with the products (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). 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 means of analyzing consumption purpose. Drinking 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 1. Wine consumption tends to be weighed 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 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 & Utilitarian benefits Wine Experiential benefits Symbolic benefits Figure 1: A purposive analysis of wine consumption Source: Steve, 2006 Electronic copy available at: https://ssrn.com/abstract=3695870 RESEARCH ON CONSUMER BEHAVIOR OF WINE IN VIETNAM 115 Simone 2008). The themes they collected when asking people questions about why they drink wine can be summarized in Table 1 Regarding the Marketing efforts of wine producers, country of origin and grape varieties are the most important wine attributes (Areni 1999). Besides, when asked which wine bottle attribute was the most important one to their purchase decision, respondents considered price per bottle as the most important, followed by grape varietals and brand names Table 1 Why do people drink wine Utilitarian - Experiential As lubrication For better health Because of alcohol dependency For refreshment As a digestive aid - For the taste and smell It goes with food For an aesthetic experience For relaxation To aid socializing For exploring and to gain a challenge To try something new For the impact of alcohol To create or recall a memory Because it is sensual Symbolic - From habit and cultural background For religion and secular ritual Because it is natural product To celebrate For social acceptance Due to peer pressure As a result of promotion or hype To establish status Source: Steve & Simone, 2008 Using the Input, Process, Output consumer behavior model, adapting Steve & Simones research (2008) and taking into account Vietnamese consumers lifestyle, this study proposes a conceptual framework in Figure 2 Marketing efforts of the wine producers or distributors consist of the 4Ps of marketing mix (Product, Price, Place and Promotion). The Utilitarian (physical) benefits of wine will include the healthy and refresh characteristics of wine. On the other hand, the Experiential benefits and Symbolic benefits deal with the emotional aspects of the wine drinkers. The Experiential benefits embrace the enjoyment and situational facets of wine drinking. In addition, the Symbolic benefits describe the importance of ritual, the historical perspective and the image of the wine drinkers Marketing efforts Utilitarian benefits Experiential benefits Money spent on Wine Symbolic benefits Figure 2: Conceptual framework Electronic copy available at: https://ssrn.com/abstract=3695870 116 HA NAM KHANH GIAO, PHAM NGOC DUONG AND TRAN NGOC TU All of these concepts and dimensions will be used to measure the relationships between them and wine consumption level through the amount of money spent on wine (Steve 2006), see Table 2 Table 2 Concept operationalization and measurement scales Concept Dimension Element Measurement Scale Coding Marketing efforts Product Country of Origin Grape Varieties Interval (5-level Likert) Interval (5-level Likert) Interval (5-level Likert) Nominal Nominal ME_COU ME_GRA ME_PRI ME_PLA ME_COM Interval (5-level Likert) Interval (5-level Likert) Interval (5-level Likert) Interval (5-level Likert) ME_PAC UB_HEA UB_REF EB_ALC Interval (5-level Likert) EB_DIV Interval (5-level Likert) Interval (5-level Likert) Interval (5-level Likert) Interval (5-level Likert) Interval (5-level Likert) Interval (5-level Likert) Interval (5-level Likert) Interval (5-level Likert) Interval (5-level Likert) Interval (5-level Likert) Nominal EB_TAS EB_SOC EB_FOO EB_REL SB_RIT SB_FAM SB_MEM SB_LIF SB_SEL SB_STA MS_PRI Nominal MS_BOT Price Place Promotion Communication channel Packaging Utilitarian Healthy benefits Refreshness Experiential Enjoyment benefits Symbolic benefits Money spent on wine Alcohol effect Diversity & intellectual challenge Taste Situation Social drinking Wine and food Relaxation The importance of ritual The history Family tradition perspective Memory Image Lifestyle Self-image Status Average purchase price per bottle Average bottles consumed per month Data Analysis General Descriptive Information The relevant target population of focus to the study is the wine drinkers in Ho Chi Minh City. The geographic area is wide-spread, and the officially legal alcohol consumption age of Vietnam is over 18, which is a very long range as well. This study implements the non-probability sampling method. Moreover, wine, somehow, is still a a luxurious thing in Vietnam. So, the target population is mostly in economic class B (household monthly income US$500- US$999) and class A (household monthly income US$1,000 and above), and the convenience sampling method is used. The respondents for personally administered survey are selected in the supermarkets, department stores, alcohol shops and restaurants. Meanwhile, the email-administered survey targets friends and colleagues Electronic copy available at: https://ssrn.com/abstract=3695870 RESEARCH ON CONSUMER BEHAVIOR OF WINE IN VIETNAM 117 Because the population is unknown, this study uses the proportion technique to derive the sample size (Zikmund 2000). There were 450 questionnaires that were delivered. The received responses are 414, 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 chosen for the data analysis The percentage of male is 82.4%, while the percentage of female is 17.6%. In terms of respondents age, the most common group was between 20 29 years of age (77%), while 14%, 5%, 3%, 1% and 0.3% are of people aged between 30-39, under 20, 40-49, 50-59 and over 60 respectively. Regarding the average monthly income of the respondents, the groups of 3 4.5 million and 4.5 7.5 million are the most common with 38% and 35%, respectively, the others are under 3 million (10%), 6 9 million (9%) and over 9 million (8%) Factors Influencing of Wine Consumption The process of assessment and refinement of measurement scale is implemented through two steps using SPSS software. The first step is exploratory factor analysis (EFA) and Cronbachs alpha to assess unidimentionality and reliability (Hair et al 1998). The second step is EFA with all scales together to assess convergent validity and discriminant validity. Then, the four new variables of Symbolic, Utilitarian & Experiential, Marketing Effort and Enjoyment are used in the regression analysis The regression failed to produce significant results as the Adjusted R Square was too small (0.034) (Table 3) Table 3 Multiple Regression result Model Summary Model R R Square Adjusted R Square Std. Error of the Estimate 209a 044 034 2.80967 a Predictors: (Constant), Enjoyment benefit factor, Marketing effort factor, Symbolic benefit factor, Utilitarian & Experiental benefit factor ANOVAb Model Regression Residual Total Sum of Squares df Mean Square F Sig 137.061 3007.716 3144.777 381 385 34.265 7.894 4.341 002a a Predictors: (Constant), Enjoyment benefit factor, Marketing effort factor, Symbolic benefit factor, Utilitarian & Experiental benefit factorb. Dependent Variable: Money spent calculated Therefore, another analysis method had to be used to test the hypotheses. The dependent variable (Money spent on wine) is measured by Average bottles per month (MS_BOT) and Average price per bottle (MS_PRI). These observation Electronic copy available at: https://ssrn.com/abstract=3695870 118 HA NAM KHANH GIAO, PHAM NGOC DUONG AND TRAN NGOC TU variables are measured in nominal scale. So, the suitable data analysis method is Discriminant Analysis (Hair et al, 1998). The conceptual framework is split into two frameworks to verify the relationship between the factors and the dependent variables. The two new conceptual frameworks are described in Figure 3 and Figure 4 Marketing effort factor Utilitarian & Experiential benefits factor Average bottles consumed per month Enjoyment benefits factor Symbolic benefits factor Figure 3: Adjusted conceptual framework 1 Marketing effort factor Utilitarian & Experiential benefits factor Average pri ce per bottle Enjoyment benefits factor Symbolic benefits factor Figure 3: Adjusted conceptual framework 2 Discriminant analysis for adjusted conceptual frameworks The Average bottles per month was input to SPSS Discriminant Analysis as grouping variable, and the three factors were being used as independents. The result of the analysis is listed in Table 4 In the Tests of Equality of Group Means, the Marketing effort factor was not statistically significant (Sig. = 0.113 > 0.05). Therefore, this factor would have been removed from the discriminant equation Table 4 Discriminant analysis result - Average bottle consumed per month Tests of Equality of Group Means Symbolic benefit factor Utilitarian & Experiential benefit factor Marketing effort factor Enjoyment benefit factor Wilks Lambda F df1 df2 Sig .835 953 969 944 12.458 3.076 2.016 3.704 3 3 189 189 189 189 000 029 113 013 Summary of Canonical Discriminant Functions Eigenvalues Function Eigenvalue % of Variance Cumulative % Canonical Correlation 215a 019a 003a 90.6 8.0 1.4 90.6 98.6 100.0 421 136 058 a. First 3 canonical discriminant functions were used in the analysis Electronic copy available at: https://ssrn.com/abstract=3695870 RESEARCH ON CONSUMER BEHAVIOR OF WINE IN VIETNAM 119 Wilks Lambda Test of Function(s) Wilks Lambda Chi-square df Sig .805 978 997 40.747 4.155 641 12 000 656 726 1 through 3 2 through 3 Standardized Canonical Discriminant Function Coefficients Function Symbolic benefit factor Utilitarian & Experiential benefit factor Marketing effort factor Enjoyment benefit factor 881 -.002 018 290 -.232 086 1.021 -.159 -.344 1.158 -.226 -.276 Canonical Discriminant Function Coefficients Function Symbolic benefit factor Utilitarian & Experiential benefit factor Marketing effort factor Enjoyment benefit factor (Constant) 850 -.002 017 261 000 -.224 084 992 -.143 -.039 -.332 1.125 -.219 -.249 272 Unstandardized coefficients Classification Statistics Classification Resultsa,b Money spent on wine - Average bottle per month Cases Selected Original Count % Cases Not Selected Original Count % Less than 1 1 - 4 5 - 8 More than 8 Less than 1 1 - 4 5 - 8 More than 8 Less than 1 1 - 4 5 - 8 More than 8 Less than 1 1 - 4 5 - 8 More than 8 Less than 1 Predicted Group Membership 5 - 8 More than 8 132 33 95.7 75.0 20.0 83.3 130 38 95.6 86.4 100.0 100.0 138 44 100.0 100.0 100.0 100.0 136 44 100.0 100.0 100.0 100.0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 a. 74.1% of selected original grouped cases correctly classified b. 70.5% of unselected original grouped cases correctly classified Electronic copy available at: https://ssrn.com/abstract=3695870 Total 138 44 100.0 100.0 100.0 100.0 136 44 100.0 100.0 100.0 100.0 120 HA NAM KHANH GIAO, PHAM NGOC DUONG AND TRAN NGOC TU In the Test of Function(s), only the functions 1 through 3 had the Sig. value = 0.000 0.05). Consequently, the adjusted conceptual framework 2 was not supported From the discriminant analysis result, there were three factors that statistically significantly contribute to the differentiation of the average bottle consumed per month: Symbolic benefit factor, Enjoyment benefit factor and Utilitarian & Experiential benefit factor. The Marketing effort factor did not have sufficient statistical evidence of contributing to the differentiation of the dependent variable Symbolic benefit factor had the strongest contribution to the differentiation between groups of wine consumption. Symbolic benefit had a positive impact on levels of wine consumption; consumers seemed to pay more attention to symbolic values, such as lifestyle, family tradition, and self-image while drinking wine than other elements. The second factor contributing to the differentiation was the Enjoyment benefit factor; this was created by three elements from the original Experiential benefit concept. In short, the way the consumers enjoy life with wine, such as matching them with food, the taste and the relaxation effect, is important to wine consumers. The last factor contributing to the differentiation was the combination of Utilitarian & Experiential benefits. However, the contribution level was weaker than two factors above. Although the Healthy benefit and Social drinking aspect of wine were stated in the responses of the open question, they were proved not to be as important as the previous two factors Conclusions Generally, the study helps to define and measure the factors influencing the consumer behaviors of wine in HoChiMinh City. The result of discriminant analysis based on the Average bottles consumed per month was statistically significant and quite interesting. The Symbolic benefit factor turned out to be the dominant contributor to the differentiation between consumer groups. Besides, Enjoyment benefit factor contributed to the differentiation of the consumer groups but in a weaker level Utilitarian & Experiential benefit factor also contributed to the differentiation of Electronic copy available at: https://ssrn.com/abstract=3695870 RESEARCH ON CONSUMER BEHAVIOR OF WINE IN VIETNAM 121 Average bottles consumed per month to a certain extent. The last factor, Marketing effort was proved not to contribute to the differentiation of consumer groups, this fact was also supported by the answers of the open question that there is surprisingly little communication activity and wine information in Vietnam The most important finding in this study might best serve the integrated marketing communication aspect. The result proved that the symbolic benefit factor played the most crucial role for Vietnamese wine consumers. This fact can be a foundation for a totally new marketing concept of wine. Currently, wine is marketed mostly by product features and packaging. 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South Western College Publishing HA NAM KHANH GIAO: ASSOCIATE PROFESSOR DOCTOR, DIRECTOR OF THE INSTITUTE OF APPLIED ECONOMICS, UNIVERSITY OF FINANCE AND MARKETING, VIETNAM PHAM NGOC D UONG: PHD., LECTURER AT UNIVERSITY OF F INANCE AND MARKETING, VIETNAM TRAN NGOC T U: PHD CANDIDATE AT UNIVERSITY OF FINANCE AND MARKETING, VIETNAM Electronic copy available at: https://ssrn.com/abstract=3695870 ... 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. The Vietnamese consumers are facing many types? ?of? ?wine? ?from local non-grape? ?wine? ?to imported? ?wine? ?with very... 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... or possibly tending towards one or other? ?of? ?them depending on the precise situation? ?of? ?consumption 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