INTRODUCTION
Research background
Globalization has become an essential process for countries worldwide, compelling nations to integrate or risk falling behind (Đang 2009) Vietnam recognized this necessity and joined the WTO as its 150th member on January 11, 2007 This integration has led to heightened competition between domestic and foreign goods and services, a direct outcome of economic globalization (Netemeyer 1991, cited in Ranjbarian and Barari 2011).
As local enterprises enter the international market, they face increased challenges from foreign competition and a wider array of product choices due to relaxed trade policies (Wang and Cheng 2004) To thrive, these firms must focus on marketing strategies and boosting sales while addressing the critical question of what influences Vietnamese consumers to choose domestic products over imported ones This thesis aims to explore four key factors that affect domestic consumption in Vietnam's market.
Problem statement
Numerous academic researchers have explored the factors influencing consumer choices between domestic and foreign products, particularly in both developed and transitioning economies (Nguyen et al., 2008) One significant factor is consumer ethnocentrism, which directly impacts purchase intentions and has been analyzed by various scholars, including Herche (1994), Klein and Ettenson (1999), Nguyen and Nguyen (2008), Shimp and Sharma (1987), Sumner (1906), and Vida and Reardon (2008) Additionally, the role of patriotism in consumer behavior has been examined by Bannister and others.
Research on consumer perceptions of domestic and imported product quality has been explored by various scholars, including Han (1988), Klein (2002), and Vida and Reardon (2008) Additionally, the concept of cosmopolitanism has been examined in studies by Javalgi et al (2004) and Suh and Kwon (2002) In Vietnam, Nguyen and Nguyen (2008) are notable for their contributions to this area of research However, to my knowledge, there is a lack of studies investigating the factors influencing Vietnamese consumers' choices between domestic and foreign products.
In 2004, Vietnam initiated the "Vietnam High Quality Products" program, followed by the nationwide campaign "Vietnamese use Vietnamese products," launched on July 31, 2009, through Document No 264-TB/TW issued by the Politburo This initiative highlights the Vietnamese government's recognition of the significance of promoting domestic consumption Understanding the factors that influence domestic purchasing behavior is essential for enhancing marketing strategies among local enterprises in Vietnam's market.
Research objectives
This thesis seeks to implement and evaluate the domestic consumption model proposed by Vida and Reardon (2008) within the context of Vietnam as an emerging economy The findings will provide valuable managerial insights for local businesses to enhance their marketing and business strategies To validate the model's applicability, the study will assess the impact of various factors on domestic consumption, guided by two key research questions.
Q1 Which factors do influence the domestic consumption in Vietnam?
Q2 How do factors influence the domestic consumption in Vietnam?
This study defines imports as products brought into Vietnam from technologically and economically advanced countries, while domestic goods refer to items produced or manufactured by Vietnamese companies or foreign direct investment (FDI) companies operating within Vietnam.
Scope and Research methodology
This research focuses on the Vietnamese market, specifically examining consumer behavior related to refrigerator usage, which is essential for every Vietnamese household According to Euromonitor International (2010), the increasing busyness of urban lifestyles has led consumers to prefer infrequent, bulk grocery shopping trips, often just once a week or fortnight This shift has resulted in a trend where many Vietnamese consumers opt for larger refrigeration appliances, enabling them to store more food at home and reduce the time spent on grocery shopping Statistical data on refrigerator sales can be found in Appendix 1.1.
The research is conducted in two main stages: the initial stage involves focus groups and a pilot test to develop a comprehensive questionnaire, while the second stage consists of quantitative research with 396 samples, as detailed in Chapter 3 The reliability of the measurement scales is re-evaluated using the Cronbach alpha coefficient and Exploratory Factor Analysis (EFA), followed by Confirmatory Factor Analysis (CFA) to validate the findings.
Euromonitor International stands as the global leader in consumer market strategy research, boasting a presence in numerous countries with analysts in 80 nations Their comprehensive market research covers every significant trend and driver The thesis employs Structural Equation Modeling (SEM) techniques to test its theoretical model, utilizing PASW Statistics for analysis.
Structure of the research
The thesis is structured into five chapters, beginning with Chapter 1, which introduces the research background, problem statement, objectives, scope, and methodology Chapter 2 reviews relevant literature on factors influencing domestic consumption and outlines the hypotheses and research model Chapter 3 details the research methodology employed in the study In Chapter 4, data analysis and findings are presented, followed by Chapter 5, which discusses the implications of the findings, acknowledges limitations, and suggests directions for future research.
LITERATURE REVIEW
Introduction
This chapter aims to explore and analyze relevant theories within the existing literature, building upon the overview provided in the previous chapter It presents a research model that encompasses key topics such as the literature review on domestic consumption, perceptions of product quality in imports, and concepts like consumer ethnocentrism, patriotism, and cosmopolitanism.
Domestic Consumption (DC)
Domestic consumption (DC) refers to the buying and utilization of local products, as defined by the Oxford Advanced Learner’s Dictionary In marketing research, scholars analyze consumer behavior, focusing on attitudes and perceptions that influence purchasing decisions These diverse perceptions significantly shape consumer attitudes and intentions, ultimately impacting their buying behaviors (Vida and Reardon, 2008).
Import Product Quality Perception (IPQP), Consumer Ethnocentrism (CET), Patriotism (PAT) and Cosmopolitanism (COS)
2.3.1 Import Product Quality Perception (IPQP)
Consumers' intentions to purchase domestic or imported products are significantly influenced by their perception of quality, which encompasses various dimensions such as workmanship, design, durability, and value for money Research indicates that in developed countries, consumers often view domestic products as superior in quality, while the opposite perception is prevalent among consumers in developing countries.
In 1906, Sumner first introduced the concept of ethnocentrism, defining it as the perspective that places one's own group at the center of all things, evaluating others in relation to it (Sharma et al., 1995) Consumer ethnocentrism specifically refers to the tendency of individuals to view their own group as the focal point, interpreting other cultures through this lens and favoring those who share similar cultural backgrounds while dismissing those who do not (Shimp and Sharma, 1987) This phenomenon can influence consumer behavior, predicting preferences for domestic products over foreign ones, though the accuracy of these predictions may vary across different product categories (Herche, 1992, cited in Balabanis et al., 2001).
Consumer ethnocentrism represents beliefs that purchasing imported products is wrong and immoral because it can hurt the domestic economy and can cause the loss of jobs (Shimp and Sharma 1987).
Patriotism is defined as a deep love for one's country and a readiness to defend it, characterized by strong attachment and loyalty without hostility towards other nations This sentiment typically develops early in life and remains persistent due to fundamental needs for security, belonging, and self-enhancement, making patriotic attitudes resistant to change Patriots often demonstrate a willingness to sacrifice personal interests for the greater good of their nation.
Cosmopolitanism, derived from the Greek term for "citizen of the world," is a concept rooted in anthropology and social psychology, increasingly relevant in marketing and management (Cleveland et al., 2010) Individuals who identify as cosmopolitan often engage with international media, foreign literature, and films, even while residing in their home countries (Hannerz).
In recent years, scholars have reached a consensus that the term cosmopolitanism, previously used to describe individuals who travel extensively, should be redefined to encompass a distinct set of attitudes, beliefs, and traits This shift in perspective emphasizes the importance of understanding cosmopolitanism as more than mere mobility, focusing instead on the underlying characteristics that define a cosmopolitan mindset.
“an ethos of cultural openness” (Kurasawa2004 cited from Cleveland et al 2010).
Cosmopolitan consumers embrace new ideas and prioritize functional needs over tradition or social influence when selecting products or services They seek offerings that effectively fulfill their desired functions, reflecting a progressive mindset in their purchasing decisions.
Cannon et al (2009) argue that when cosmopolitan consumers prioritize functional needs over local customs and traditions, consumer cosmopolitanism emerges as a viable transnational segmentation base (Riefler and Diamantopoulos, 2009).
Hypothesis development and Research Model
2.4.1 Import Product Quality Perception (IPQP), Consumer
Ethnocentrism (CET) and Domestic Consumption (DC)
According to Wang and Cheng (2004), consumers are more likely to choose products from technologically advanced countries when they perceive their quality to be superior to that of goods from less developed nations Additionally, the country of origin of a product can trigger a consumer's ethnocentric tendencies, as noted by Huddleston et al.
Domestic consumption is shaped by both ethnocentrism and quality perception, with consumers in developed countries generally viewing domestic products as superior to foreign ones However, this perception differs in developing nations like Nigeria, Romania, Turkey, India, and China, where consumers often regard foreign products, especially those from higher origin countries, as having better quality than local offerings This trend is also observed in Vietnam, highlighting the varying attitudes towards product quality across different economic contexts.
Research indicates a negative correlation between the perceived quality of imported products and the intention to purchase domestically (2008) Additionally, Rybina et al (2010) highlight that consumer ethnocentrism positively influences domestic buying behavior in Kazakhstan This study proposes several hypotheses based on these findings.
H1: Import Product Quality Perception is negatively related to Domestic Consumption
H2: Consumer Ethnocentrism has a positive effect on Domestic Consumption
2.4.2 Cosmopolitanism (COS), Patriotism (PAT) and Consumer
Balabanis et al (2001) explore the influences of patriotism, nationalism, and internationalism on consumer ethnocentrism in Turkey and the Czech Republic, revealing that both patriotism and nationalism significantly impact consumer attitudes These findings align with previous research in the field, highlighting the importance of national sentiment in shaping consumer behavior.
Research has shown that patriotism positively influences ethnocentric attitudes among consumers, while cosmopolitanism negatively impacts these attitudes, particularly in Kazakhstan (Rybina et al., 2010) However, other studies present mixed findings regarding the effects of cultural openness and related concepts like cosmopolitanism, internationalism, and global mindedness on ethnocentrism (Suh and Kwon, 2002) Vida and Reardon (2008) further highlight that in Slovenia, cosmopolitanism serves as a direct antecedent to consumer ethnocentrism, exhibiting a negative relationship with consumer ethnocentric tendencies Based on these insights, this study proposes two hypotheses.
H3a Patriotism is positively related to Consumer Ethnocentrism. H3b Cosmopolitanism is negatively related to Consumer Ethnocentrism.
2.4.3 Patriotism (PAT) and Domestic Consumption (DC)
A study by Han (1988) indicates that patriotism positively influences consumers' preference for domestic products over foreign ones (Granzin and Olsen, 1998) Furthermore, research by Vida and Reardon (2008) confirms that in Slovenia, domestic consumption is significantly driven by the emotional aspects of patriotism Therefore, it is recommended that the fourth hypothesis be considered in this context.
H4: Patriotism is positively affected to Domestic Consumption.
Based on presented hypotheses above, the research model in this study:
Import product quality perception (IPQP)
METHODOLOGY
Introduction
This chapter will go into details the problems related to research methods,research procedure and scales for the purposes of measuring constructs and testing the research model.
Research design
The research consisted of two stages: the initial pilot study, which utilized both qualitative and quantitative methods to develop the questionnaire, followed by the official quantitative research phase that tested the research hypotheses and model using the gathered data The research procedure is illustrated in Figure 3.1.
Literature reviews (DC scale, IPQP scale, CE scale, PAT scale, COS scale)
The primary objective of this stage was to develop measurement scales tailored for the Vietnamese market To achieve this, the original scales were translated from English to Vietnamese following the forward and back translation method proposed by Craig and Douglas (2003) for cross-cultural adaptation During the forward translation, the scales were translated into Vietnamese, with the exception of the CET scale, which was sourced from a local study by Nguyen and Nguyen in 2008, under the guidance of a specialist with extensive experience studying in the United States.
In the back translation process, a specialist with experience in teaching English at the University of Economics Ho Chi Minh City translated the initial Vietnamese questionnaire back into English to validate its accuracy The original and translated versions were then compared to identify any errors and assess the translation quality (Craig and Douglas, 2003) Following this stage, the next steps were implemented.
- depth interview technique to ensure the adaptable questionnaire to Vietnam’s market Nine customers were asked around The questionnaire for group discussion was presented in Appendix 3.1.
The second draft of the questionnaire was created using Google Documents and distributed to 400 MBA students, receiving 129 responses within two weeks The feedback was coded, filtered, and analyzed using PASW Statistics 18 This process aimed to finalize the official questionnaire for quantitative research by testing Cronbach’s alpha, conducting exploratory factor analysis (EFA), and making necessary adjustments to the items in each construct.
Reliability analysis was first used to remove items with low Item-Total Correlations ( 0.5; Sig (Bartlett’s test) 50% (68.75% and 73.45%). These results showed that the draft questionnaire could be used in main survey.
Sampling allows researchers to make inferences about an entire population by analyzing a subset of its elements Key advantages of sampling include reduced costs, enhanced accuracy, quicker data collection, and accessibility to population members (Donald and Pamela, 2003) In this study, the focus was on customers residing and working in Vietnam However, identifying the complete customer base and creating an extensive sampling frame proved challenging Given constraints in time, budget, and expertise, the study employed a non-probability sampling method, specifically convenience sampling While this technique is among the least reliable, it is the most cost-effective and practical option for this research.
A survey was conducted among second-degree students and MBA students at the University of Economics of Ho Chi Minh City The literature lacks a consensus on the optimal sample size needed to accurately represent a population, as noted by Hair et al.
In research, an optimal sample size is crucial for reliable analysis, with a recommended minimum of 100 participants and ideally a ratio of at least 10:1 observations to variables Tabachnick and Fidell (2007) suggest that a sample size exceeding 300 cases is considered comfortable For Structural Equation Modeling (SEM), Bentler and Chou (1987) advocate for ten responses per free parameter, increasing to 15 if multivariate normality assumptions are violated Bollen (1989, cited in Nguyen and Nguyen 2008) states that the minimum sample size should be five respondents per estimated parameter This study aimed for a sample size of 378, calculated as seven times the number of parameters (7*54), and to achieve this, 700 questionnaires were distributed, exceeding the required sample size by over 50%.
The feedback questionnaires were meticulously coded, cleaned, and filtered using PASW Statistics 18, which facilitated analysis, scale testing, reliability assessments, and exploratory factor analysis Additionally, AMOS 18 was employed for confirmatory factor analysis and to evaluate the theoretical model through structural equation modeling.
Measurement
This study employed a 7-point Likert scale, ranging from 1 (strongly disagree) to 7 (strongly agree), to gather data It utilized five distinct measurement scales: the CET scale, IPQP scale, PAT scale, COS scale, and DC scale.
3.3.1 Scale to measure Consumer Ethnocentrism (CET)
Consumer ethnocentrism, as discussed in chapter 2, reflects the belief that buying imported goods is unethical and detrimental to the domestic economy, potentially leading to job losses Consequently, the CET scale incorporates elements that illustrate this perspective.
In 1987, Shimp and Sharma developed the Consumer Ethnocentrism Scale (CET), which consists of 17 items Since its creation, numerous researchers, including Balabanis et al (2001) and Ettenson et al., have utilized this scale in their studies across both developed and emerging markets.
(1998), Good and Hudleston (1995), Klein et al (1998), Sharma et al
The study utilized the CET scale, which was adapted from earlier research conducted by Nguyen and Nguyen in Vietnam in 2008 This scale was reconstructed to include five specific items, building on the foundational work of various researchers, including Wang and Cheng (2004), Vida and Reardon (2008), and Rybina et al (2010).
1 It is not right to purchase foreign made products
2 Vietnamese consumers who purchase products made in other countries are responsible for putting their fellow Vietnamese out of work
3 A real Vietnamese should always buy Vietnamese - made products
4 We should purchase products manufactured in Vietnam instead of letting other countries get rich off us
5 Vietnamese should not buy foreign products, because this hurts Vietnamese business and causes unemployment
3.3.2 Scale to measure Import Product Quality Perception (IPQP)
Product quality perception is measured through items show workmanship, appearance, design, durability, functionality, prestige, reliability, technical advancement and value for money.
This study assessed Import Product Quality Perception by utilizing a scale originally developed by Vida and Reardon (2008) in Slovenia, which was subsequently adapted The English version of this scale was translated into Vietnamese, referencing the revised scale by Nguyen and Nguyen (2008) in Vietnam The adapted scale comprises four key items.
Import Product Quality Perception (IPQP) (Adapted from Vida and Reardon, 2008)
Relative to Vietnamese refrigerator, imported refrigerator…
1 … are generally cleverly designed and attractive
2 … quite reliable and seem to last desired length of time
3 …are carefully produced and have fine workmanship
4 …usually represent a good value for money
Patriots generally exhibit a readiness to prioritize national interests over personal gains, reflecting their willingness to make sacrifices for their country Therefore, it is essential that the measurement scale for this concept effectively captures these sentiments.
The Patriotism Scale, originally developed by Kosterman and Feshbach in 1989, consists of 12 items and has been utilized and refined by various researchers, including Balabanis et al (2004), Klein and Ettenson (1999), and Rybina et al.
(2010), Vida and Reardon (2008) This study adapted the scale developed by Rybina et al (2010) with 4 items:
1 Being a Vietnamese citizen means a lot to me
2 I am proud to be a Vietnamese citizen
3 When a foreign person praises Vietnam, it feels like a personal compliment
4 I feel strong ties with Vietnam
The scale was translated using the forward and back translation method established by Craig and Douglas, with qualitative research employed to refine certain items Specifically, Item 4 (PAT4) was enhanced with insights from specialists, conveying in Vietnamese the meanings of “I feel a strong connection to Vietnam” or “I sense a close bond with Vietnam.”
This study utilized the original scale's first item (Item 5: I love my country) due to its content validity Group discussions indicated that individuals who love their country should affirm this sentiment internally In total, the new PAT scale comprises five items.
1 Being a Vietnamese citizen means a lot to me
2 I am proud to be a Vietnamese citizen
3 When a foreign person praises Vietnam, it feels like a personal compliment
PAT3 modifying 4 I feel strong ties with Vietnam.
Cosmopolitanism is defined as an individual's aspiration to explore and gain new insights by traveling and experiencing diverse cultures (Cannon and Yapak 2002, as cited in Vida and Reardon 2008).
This study adapted the Cosmopolitanism scale from Rybina et al (2010).
Cosmopolitanism (COS) (Adapted from Rybina et al 2010)
1 I like immersing myself in different cultural environments
2 I like having contact with people from different cultures
3 I would enjoy travelling to foreign countries for an extended period of time
4 Getting information and news from around the world is important to me
3.3.5 Scale to measure Domestic Consumption
Domestic Consumption was measured by items which related to activities associated with the purchase of domestic products/ brands and identifying retail outlets that stock them.
The original scale, created by Granzin and Olsen in 1998, consisted of six items and was developed in the United States In 2008, Vida and Reardon revised this scale, reducing it to four items, which were utilized in the current study.
Domestic consumption (DC) (Adapted from Vida and Reardon 2008)
1 Mostly I try to buy brands of domestic companies
2 Whenever possible, I take time to look at labels in order to knowingly buy more brands of domestic companies
3 I shop first at retail outlets that make a special effort to offer a variety of domestic products
4 I shop first at retail outlets that make a special effort to offer brands of domestic products
Summary
This chapter outlines the research methodology and design utilized in this study, focusing on the development of the questionnaire and the analytical methods for assessing measurement scales and data analysis The subsequent chapter will present the research results and findings of the study.
DATA ANALYSIS AND FINDINGS
Introduction
This chapter analyzes the results of the main study, building on the methodology and parameterization of six research concepts outlined previously Key tasks include testing the scales, conducting reliability tests, and performing exploratory factor analysis Additionally, confirmatory factor analysis and structural equation modeling were utilized to evaluate the theoretical model.
Descriptions of sample
In the previous chapter, a total of 700 questionnaires were distributed to individuals who have either used or plan to purchase a refrigerator, resulting in a final sample of 396 completed responses As detailed in Table 4.1 and illustrated in Figure 4.1, the sample comprised a higher percentage of women (54%) compared to men (46%) Additionally, around 34% of the respondents reported their income level.
2 to under 6 million (VND), 38 percent of respondents had the income from 6 to 10 million and 29 percent of respondents had income larger than 10 million.
Sample Description Frequency Percent Cumulative
Scale assessment
In Structural Equation Modeling (SEM) using maximum likelihood estimation, the assumption of multivariate normality for continuous outcome variables is essential (Kline, 2011) Non-normal distributions can be identified through significant skewness or kurtosis, with skewness values exceeding 3.0 and kurtosis values surpassing 8.0 indicating unacceptable non-normality (Kline, 2011) However, as shown in Table 4.2, all skew and kurtosis indices for the scales in this study were below 1.0 and 4.0, respectively, confirming that the data is considered normal for Confirmatory Factor Analysis (CFA) and SEM purposes.
Variable Min Max Skew Kurtosis
The analysis revealed that all observed variables exhibited an Item Total Correlation greater than 0.3, with Cronbach’s Alpha coefficients exceeding 0.6 Specifically, the Cronbach’s Alpha for the CET scale was 0.81, for the IPQP scale it was 0.86, for the PAT scale it was 0.93, for the COS scale it was 0.83, and for the DC scale it was 0.85, as detailed in Table 4.3 Consequently, all observed variables demonstrated acceptable reliability.
2 This problem had presented in pilot test – chapter 3. used in the EFA.
Scale mean if item deleted
Scale variance if item deleted
Cronbach's Alpha if item deleted
Cronbach’s Alpha coefficient is used to evaluate the reliability of scale.
Reliability is a necessary, but not sufficient, condition for validity (Thompson, 2004), which is why factor analysis plays a crucial role in evaluating score validity In this process, all retained variables undergo Exploratory Factor Analysis (EFA) to refine the measurement instrument and identify the components that account for the correlations among variables A key objective of EFA is to condense a large set of variables into a smaller number that captures the essential characteristics of the original data Each extracted component reflects a distinct aspect of the construct under investigation.
This study employed the Principal Axis Factoring Method along with Promax Rotation, opting for these techniques over the Principal Components Analysis Method and Varimax Rotation This choice was made because the selected methods more accurately identify the latent dimensions represented in the original variables, thereby better reflecting the underlying data structure (Gerbing and Anderson 1988, cited in Nguyen and Nguyen 2008).
The results of the Exploratory Factor Analysis (EFA) indicated the extraction of five factors with an Eigenvalue of 1.61 and a Total Variance Explained of 59.91%, surpassing the 50% threshold All factor loadings exceeded the cut-off value of 0.4, and the Kaiser-Meyer-Olkin (KMO) measure yielded a high score of 0.82 Additionally, Bartlett’s test of sphericity was significant (p < 0.05), confirming the appropriateness of the EFA and validating the use of all measures for subsequent analyses.
PAT IPQP DC CET COS
Variance explained 22.54 13.26 10.90 7.72 5.48 Total variance explained: 59.91
Extraction Method: Principal Axis Factoring.
Rotation Method: Promax with Kaiser Normalization. a Rotation converged in 5 iterations.
Confirmatory Factor Analysis (CFA)
Confirmatory Factor Analysis (CFA) is a statistical method used to evaluate how well measured variables reflect a limited number of underlying constructs According to Hair et al (2010), CFA tests the alignment between a researcher’s theoretical expectations of factor loadings and the actual data By providing statistical insights, CFA helps determine the accuracy of the proposed factor structure in relation to the observed data, allowing researchers to confirm or refute their theoretical models.
Measurement model validity, as outlined by Hair et al (2010), hinges on achieving acceptable goodness-of-fit levels and demonstrating construct validity Researchers often employ indices such as the Chi-square (χ²) index, degrees of freedom (df), and the statistical significance of the chi-square (p-value) to assess model fit A p-value of less than 0.05 suggests a significant difference between covariance matrices, indicating potential fit issues, while smaller chi-square values and p-values greater than 0.05 support the theory's alignment with reality However, the chi-square test has limitations, particularly as sample sizes increase, making it less effective in distinguishing between good and poor models Hair et al recommend complementing chi-square results with additional goodness-of-fit indices This study utilizes several indices, including CMIN/df, GFI, CFI, TLI, and RMSEA, with benchmarks such as GFI, TLI, and CFI values of 0.9 or higher, and CMIN/df values of 2 or less, or in some cases, 3 or less, to evaluate model fit.
McIver 1981 cited from Netemeyer et al 1991); RMSEA
