Impacts of ethical marketing practices on customer satisfaction and loyalty on cosmetics products a comparative study between generation z and generation y

IMPACTS OF ETHICAL MARKETING PRACTICES ON CUSTOMER SATISFACTION AND LOYALTY ON COSMETICS PRODUCTS A COMPARATIVE STUDY BETWEEN GENERATION Z AND GENERATION Y

VIETNAM NATIONAL UNIVERSITY, HANOI VIETNAM JAPAN UNIVERSITY

VIETNAM NATIONAL UNIVERSITY, HANOI VIETNAM JAPAN UNIVERSITY

Hanoi, May 2023

COMITTMENT

The present study, entitled "Impacts of ethical marketing practices on customer satisfaction and loyalty on cosmetics products: a comparative study between Generation Z and Y" represents an original research endeavor conducted by the undersigned, under the guidance of Professor Sadami Suzuki and Dr Nguyen Phuong Mai The present study employs reliable data and ensures that the quantitative analysis and findings presented in this thesis are original and have not been previously published in any other research The complete citation source has been duly acknowledged in this MBA thesis The present study adheres to the Regulation on prevention of plagiarism in academic and scientific research activities at VNU Vietnam Japan University (Issued together with Decision No 700/QD-ĐHVN dated 30/9/2021 by the Rector of Vietnam Japan University) The author pledges with personal honor that the research result presented herein is original and does not infringe upon any intellectual property rights or ethical standards The author of this thesis expresses a strong commitment and readiness to assume accountability for this research project

Signature

Student: Trần Lưu Ly

Moreover, I would like to thank the staff at the university library, who assisted me in locating and accessing the resources necessary to conduct my research Their tireless efforts and willingness to help made the research process much smoother and more efficient

Finally, I would like to express my gratitude to my family and friends, who supported and encouraged me throughout this process Their love, understanding, and patience sustained me during the long hours of research and writing

In summary, I would like to express my deep gratitude to all the individuals who have played a vital role in the successful completion of this thesis Their unwavering support and encouragement have been priceless, and I am truly indebted to them for their contributions, as this accomplishment would not have been possible without their assistance

1.3.Scope and subject of the research 2

1.4.Structure of the research 4

CHAPTER 2: LITERATURE REVIEW 6

2.9.Generation Z and Y 17

2.10.Proposed research model 18

3.6.Analyzing data plan 25

3.7.Reliability testing of scale 25

CHAPTER 4: DATA ANALYSIS 27

4.3.Findings and discussion 40

CHAPTER 5: IMPLICATIONS, RECOMMENDATIONS AND CONCLUSION 43

5.1.Research implications 43

i

LIST OF TABLES

Table 3.1: Likert 5-point scale……… ….21

Table 3.2: Measurement scale……… … 21

Table 4.1: Description of respondents’ profile……… 27

Table 4.2: Cronbach's Alpha analysis results table……….……29

Table 4.3: KMO and Barlett's Test………31

Table 4.4: Correlation………32

Table 4.5: CA (dependent variable)……… 34

Table 4.6: CS (dependent variable)………35

Table 4.7: CL (dependent variable)………36

Table 4.8: Hypothesis assessment results……… 38

Table 4.9: Comparison between Generation Y and Z in Price fairness………38

Table 4.10: Comparison between Generation Y and Z in Product fairness……….….39

Table 4.11: Comparison between Generation Y and Z in Health consciousness…… 39

Table 4.12: Comparison between Generation Y and Z in Customer satisfaction…… 39

Table 4.13: Comparison between Generation Y and Z in Customer loyalty………….40

ii

LIST OF FIGURES

Figure 1.1: Theory of planned behavior model (Ajzen, 1991)………….…………15 Figure 2.2: Proposed research model……….……… 18

iii

LIST OF ABBREVIATION

CA Customer attitude CS Customer satisfaction CL Customer loyalty

EFA Exploratory factor analysis

HC Health conscious PF Price fairness PRF Product fairness

iv

ABSTRACT

This study aims to investigate the impact of ethical marketing practices on customer satisfaction and loyalty for cosmetic products, with a specific focus on the differences between Generation Z and Generation Y consumers Ethical marketing practices refer to marketing activities that promote social and environmental responsibility, such as using sustainable packaging, cruelty-free testing, and fair-trade sourcing

To achieve this aim, a comparative study will be conducted among a sample of Generation Z and Generation Y consumers who purchase cosmetic products The study will use a quantitative research design and collect data through an online survey The survey will measure the respondents' perception of ethical marketing practices, their level of satisfaction with the cosmetic products they purchase, and their loyalty towards the brand

The data collected will be analyzed using descriptive statistics and inferential statistics, such as regression analysis and t-tests The results of the study are expected to provide insights into the relationship between ethical marketing practices, customer satisfaction, and loyalty Moreover, the study will investigate if there are any significant differences in the impact of ethical marketing practices on Generation Z and Generation Y consumers

The findings of this study will contribute to the existing literature on ethical marketing practices, customer satisfaction, and loyalty in the cosmetic industry Furthermore, the results may help cosmetic companies to understand the preferences and expectations of Generation Z and Generation Y consumers, and to develop marketing strategies that promote ethical practices and enhance customer satisfaction and loyalty.

CHAPTER 1: INTRODUCTION

The cosmetic industry has been facing growing pressure to adopt ethical marketing practices in recent years Ethical marketing practices refer to marketing activities that promote social and environmental responsibility, such as using sustainable packaging, cruelty-free testing, and fair trade sourcing These practices are increasingly important to consumers, particularly younger generations like Generation Z and Generation Y, who prioritize social and environmental responsibility in their purchasing decisions (Bartikowski & Walsh, 2011; Johnson & Young, 2017)

Ethical marketing strategies have been proved in several research to increase consumer happiness and loyalty Ethical marketing techniques, such as adopting ecologically friendly packaging, were shown to have a beneficial effect on consumer satisfaction and loyalty in the cosmetics business in a research conducted by Chandon et al (2015) Yeo and Lee (2018) also discovered that cosmetics companies that used fair trade ingredients and other ethical marketing tactics had more loyal customers

However, despite the increasing importance of ethical marketing practices in the cosmetics industry, little research has investigated if there are any differences in the impact of these practices on customer satisfaction and loyalty among different age groups This is particularly important given that GenerationZ and GenerationY consumers have been found to have different values and expectations when it comes to ethical consumption (Dangelico & Vocalelli, 2017; Joergens, 2006) Therefore, this study aims to address this research gap by investigating the impact of ethical marketing practices on customer satisfaction and loyalty in the cosmetic industry, with a specific focus on the differences between Generation Z and GenerationY consumers

The main objectives of this study are:

2  To investigate the level of awareness and importance of ethical marketing practices among Generation Z and Generation Y consumers in the cosmetic industry

 To examine the impact of ethical marketing practices on customer satisfaction and loyalty in the cosmetic industry, with a specific focus on the differences between Generation Z and Generation Y consumers

 To identify which ethical marketing practices are most influential in shaping customer satisfaction and loyalty among Generation Z and Generation Y consumers in the cosmetic industry

 To provide recommendations for cosmetic companies on how to adopt and implement effective ethical marketing practices to improve customer satisfaction and loyalty among Generation Z and Generation Y consumers

By addressing these research objectives, this study aims to contribute to a better understanding of the impact of ethical marketing practices on customer satisfaction and loyalty among different age groups, and to provide insights into how cosmetic companies can better target and engage younger consumers who prioritize social and environmental responsibility

The subject of this study is the impact of ethical marketing practices on customer satisfaction and loyalty in the cosmetic industry, with a comparative analysis between Generation Z and Generation Y consumers in Hanoi, Vietnam The primary objective of this study is to examine the level of awareness and significance attributed to ethical marketing practices among two consumer segments in Hanoi Additionally, the study

3 aims to explore the preferences and attitudes of these consumer groups towards ethical and sustainable cosmetic products

The scope of the research is limited to the city of Hanoi and focuses on the impact of ethical marketing practices on customer satisfaction and loyalty in the local cosmetic market The study will explore various ethical marketing practices, such as the use of natural and organic ingredients, cruelty-free testing, and eco-friendly packaging, as they are implemented by cosmetic companies in Hanoi The research will also investigate the differences in perception and behavior between GenerationZ and GenerationY consumers in Hanoi towards these ethical marketing practices

By conducting this study in Hanoi, we aim to provide valuable insights into the impact of ethical marketing practices on customer satisfaction and loyalty among GenerationZ and GenerationY consumers in the local cosmetic market The results of this study may also serve as a reference for cosmetic companies operating in Hanoi to better understand and cater to the needs and preferences of younger consumers who prioritize social and environmental responsibility

The motivation behind conducting a comparative study on the impacts of ethical marketing practices on customer satisfaction and loyalty in the cosmetics industry between Generation Z and Generation Y stems from several factors Firstly, the cosmetics industry has witnessed a growing emphasis on ethical marketing practices, such as sustainable sourcing, cruelty-free production, and transparent labeling Understanding how these practices influence customer satisfaction and loyalty is essential for both practitioners and researchers

Secondly, Generation Z and Generation Y represent significant consumer segments in the cosmetics market Generation Z, as the younger cohort, has distinct characteristics and preferences compared to Generation Y Exploring their attitudes and behaviors towards ethical marketing practices can provide valuable insights into the evolving consumer landscape and help businesses tailor their strategies to meet the needs and expectations of these generations

4 Furthermore, there is a need to examine potential differences between Generation Z and Generation Y in their responses to ethical marketing practices These differences could be influenced by factors such as their level of health consciousness, social awareness, digital fluency, and cultural influences By comparing the two generations, researchers can uncover unique insights into how ethical marketing practices impact customer satisfaction and loyalty differently across these segments

Overall, the research aims to contribute to the existing body of knowledge in the cosmetics industry by shedding light on the specific effects of ethical marketing practices on customer satisfaction and loyalty among Generation Z and Generation Y consumers The findings can inform marketing strategies and guide businesses in developing more effective and targeted approaches to engage these consumer groups

Chapter 1: Introduction

 Background of the study  Research objectives  Significance of the study  Scope of the research Chapter 2: Literature Review

 Definition of ethical marketing practices

 Importance of ethical marketing practices in the cosmetic industry

 Impact of ethical marketing practices on customer satisfaction and loyalty  Differences in perception and behavior between GenerationZ and GenerationY

consumers

Chapter 3: Methodology  Research design  Sampling method  Data collection  Data analysis

5 Chapter 4: Results and Analysis

 Overview of the respondents

 Awareness and importance of ethical marketing practices

 Preferences and attitudes towards ethical and sustainable cosmetic products  Impact of ethical marketing practices on customer satisfaction and loyalty  Differences in perception and behavior between GenerationZ and GenerationY

consumers Chapter 5: Conclusion

 Summary of findings  Limitations of the study

 Suggestions for future research References

Appendix

One of the most common ethical marketing practices in the cosmetic industry is the use of natural and organic ingredients This practice is often marketed as a way to reduce the use of harmful chemicals and to promote sustainable agriculture Studies have shown that consumers are more likely to purchase products that are labeled as natural or organic, and that they are willing to pay a premium for these products (Dobson and Cook, 2013; Padel and Foster, 2005)

Another important ethical marketing practice in the cosmetic industry is the use of cruelty-free testing Many consumers are concerned about the welfare of animals used in cosmetic testing, and they are more likely to purchase products that are not tested on animals (Pavlou and Fygenson, 2006) In addition, the use of eco-friendly packaging, such as recyclable or biodegradable materials, is also becoming more prevalent as a way to reduce waste and promote sustainability

Research has shown that consumers are willing to pay more for products and services when they perceive them as being fairly priced and of high quality Studies have also shown that consumers are more likely to engage in repeat purchases and become loyal customers when they perceive that the company is committed to ethical business practices, including price and product fairness

Prior research by Kim and Choi (2016) and Kim et al (2017) has suggested that fair pricing practices can positively influence consumer purchase behavior and brand trust Thus, the primary objective of this study is to delve deeper into the connection between fair pricing practices and their impact on consumer trust and loyalty, aiming to offer

7 valuable insights for companies Specifically, this research investigates the relationship between customers' perception of price fairness and their attitudes Building upon the work of Chen and Wang (2020), this study examines how perceived price fairness influences customers' intentions to repurchase from a company and recommend it to others

H1: Customers that buy cosmetics with reasonable prices tend to like them

Price fairness is a key ethical consideration in marketing (Scherer, F M and Palazzo,

G.) Consumers expect companies to set prices that are fair and reasonable, and that reflect the true value of the product or service Pricing practices that are perceived as unfair, such as price gouging or hidden fees, can damage a company's reputation and erode consumer trust In contrast, pricing practices that are transparent and based on value can enhance consumer trust and loyalty

Price pricing is one approach of fostering price equity As opposed to basing prices on the cost of manufacturing or other internal considerations, value-based pricing takes into account the value that the product or service provides to the customer The theory behind value-based pricing is that customers would pay more for a service or product that improves their quality of life

In terms of price fairness marketing, there is no more pressing issue than the question of whether or not prices are reasonable for customers According to Marn and Rosiello (1992), price fairness is the extent to which buyers consider a product's price to be reasonable in light of the product's quality Factors such as product quality, competitive price, and overall market circumstances all have a role in how customers see a certain product Numerous academic studies have looked at how pricing fairness affects shoppers' decisions Fair pricing has a favorable effect on customer buying behavior, as shown in a research by Huang and Yang (2011) According to the findings of previous studies, Grewal et al (2003) found that customers who believe prices are fair are more likely to remain loyal to a business Price equity is notable for its moral import According to Deshpande et al (1993), customers who believe a firm has honest and straightforward pricing procedures have a more favorable impression of that business

8 Numerous studies have looked at how pricing transparency affects consumers' perceptions of a business (Zeithaml et al., 1996)

One strategy for promoting product fairness is to implement strict quality control processes Quality control procedures are implemented with the purpose of guaranteeing that products adhere to rigorous quality criteria and are deemed safe for consumers' utilization Companies can also use independent third-party certification processes, such as the certification of organic or fair trade products, to provide additional assurance to consumers that products are produced in an ethical and sustainable manner (Reid, M and de Brentani, U (2004))

Product fairness is crucial in moral advertising, as it describes how people feel about

a product's quality and worth Customers are more willing to spend money on goods and services they perceive to be ethical and fair As a result, product fairness is a crucial factor in determining customer responses and loyalty to a certain brand

Bitner et al (1990) offer a paraphrased description of product fairness as the degree to which a product satisfies customer expectations, possesses superior quality, and delivers value in relation to its cost." Providing a high-quality product that meets or exceeds the expectations of the consumer is what we mean when we talk about product fairness The effect of product fairness on purchasing decisions has been the subject of several academic investigations Moorman et al (1993), for one, discovered that consumers' perceptions of product fairness had a substantial impact on their happiness and loyalty Sirdeshmukh et al (2002) came to a similar conclusion, stating that consumers place a high value on their perceptions of product quality when making purchasing decisions Product fairness is also an essential aspect of ethical marketing Customers are more likely to perceive a company as ethical if they believe that the company provides high-quality and fairly priced products (Creyer & Ross, 1997) Additionally, companies that focus on providing fair and ethical products can build a positive brand reputation and increase customer loyalty (Gainer & Padanyi, 2013) One study found that perceived product quality, which includes fairness, significantly influenced customer attitude towards the product, which in turn affected their purchase intentions (Chang & Chen, 2015) Similarly, another study found that perceived product quality had a positive effect

9 on customer satisfaction and loyalty, which are key indicators of customer attitude (Wang et al., 2016)

In addition to quality, other aspects of product fairness have also been found to impact customer attitude For example, a study on organic cosmetic products found that customers who perceived the products to be environmentally friendly and safe had a more positive attitude towards the brand and were more likely to purchase from them (Kim et al., 2017)

H2: Customers who think cosmetics items are fair are more likely to enjoy them

The aim of this research is to examine the impact of health awareness on purchasing decisions in the cosmetics market Previous studies have emphasized the significance of consumer health awareness in this particular market Consequently, this study seeks to investigate how health awareness influences consumers who are purchasing cosmetics A quantitative research approach will be employed, utilizing a questionnaire distributed to a diverse sample of individuals from the general population who have an interest in cosmetics The findings from this study will contribute to the existing body of research on consumer behavior and provide valuable insights for the cosmetics industry to better understand its target demographic.Drawing from the empirical results of Cheong and Park (2019), the present study explores the relationship between consumers' health concerns and their inclination to purchase organic cosmetics The results demonstrate a strong positive correlation between health-related consumer awareness and the desire to buy organic cosmetics Furthermore, Lee and Kim (2019) found that consumers' willingness to pay a premium for natural cosmetics is significantly influenced by their level of health awareness Numerous studies have explored the relationship between health consciousness and consumer behavior in the context of ethical marketing For instance, Johnson and Smith (2019) conducted a survey among consumers to examine the influence of health consciousness on the purchase intentions of organic cosmetic products The findings revealed that consumers with higher levels of health consciousness were more likely to choose organic cosmetics due to their perceived health benefits

10 Moreover, empirical studies have indicated that consumers are willing to prioritize a product's health focus over convenience and affordability Chiu et al (2017) conducted a study investigating consumer attitudes and preferences towards natural and organic beauty products The findings revealed that consumers are willing to invest more in organic cosmetics, even if they require additional effort in application Similarly, Kim and Kim (2017) discovered in their research that consumers are willing to spend more on natural cosmetics, despite their higher cost compared to conventional alternatives

H3: Health-conscious customers are more inclined to buy cosmetics

The impact of customer attitude on consumer behavior and purchase decisions is a critical aspect to consider in marketing strategy The present study aims to investigate the concept of consumer perception, which refers to the holistic assessment of a product or service The research will explore the various determinants of consumer perception, including personal attitudes, prior encounters, cultural values, and promotional messaging

The literature suggests that favorable customer perceptions of a product or service are linked to heightened levels of contentment, allegiance, and propensity to engage in future purchases (Wang et al., 2017) The cosmetics industry is characterized by a strong influence of customer attitudes, which are shaped by various factors including product quality, brand reputation, and perceived value (Pawar & Rathod, 2019) The present study examines the impact of ethical and sustainable products on customer attitudes and purchase intentions The findings of this study suggest that the increasing trend towards ethical and sustainable products has a positive impact on customer attitudes and purchase intentions, as evidenced by the research conducted by Kim and Lee (2020) The impact of negative customer attitudes on businesses cannot be overlooked as it can lead to a decline in sales and damage to the company's reputation (Hu et al., 2021) The impact of unfavorable occurrences such as substandard product quality, insufficient customer service, or unethical corporate conduct on customer attitudes is a significant concern

11 The purpose of this study is to examine the connection between diners' moods and their experiences with the service they get at restaurants Kim and Moon's (2009) research suggests a link between these two factors, and that's what inspired our investigation To better understand how customers' mindsets affect their experience with e-commerce services, Ahmad et al (2018) undertook a research study A favorable relationship between customer attitude and satisfaction was shown to be statistically significant According to research by Hafeez et al (2018), in the retail business, consumer attitude is a major factor in customer happiness Liu et al (2019) did a research in the hotel business and found that there is a significant positive relationship between customer attitude and customer satisfaction It is hypothesized in the current research that a client's frame of mind has a major role in whether or not they end up satisfied This research underscores the importance of customers' attitudes in the corporate world and the necessity for companies to work on improving them to boost customer happiness

H4: Customer satisfaction increases with ethical cosmetics marketing

Success in company is largely dependent on the level of client pleasure it can maintain Customers are said to be satisfied when they feel a sense of contentment or joy after purchasing and using a service or product (Oliver, 2010) client pleasure has been shown to significantly increase client loyalty High levels of customer satisfaction contribute to positive word-of-mouth, which in turn increases repeat business and profitability (Lam, Shankar, Erramilli, & Murthy, 2004)

There are a number of factors that may affect a customer's level of satisfaction, as shown by empirical studies One of the most important factors (Hallowell, 1996) in a company's success is the quality of its product or service Consumers depend on businesses to provide them with goods and services that meet their requirements and exceed their expectations The quality of the company's customer service is crucial (Bolton & Drew, 1991) Customers place a premium on businesses that provide them plenty of one-on-one care, respond quickly to their needs, and staff their employees with helpful experts According to Chen and Chang (2013), price and product fairness are significant drivers of consumer happiness, especially in the context of ethical marketing

12 The purpose of this research is to examine the factors that contribute to customers being satisfied across several dimensions According to the literature, customer satisfaction is influenced by a wide range of variables, such as those related to the client's own expectations, feelings, and valuation of the product or service (Zeithaml, Berry, & Parasuraman, 1996) Customers' expectations are shaped by a variety of factors, including personal experiences, recommendations from others, and formal marketing materials Emotions' effect on consumer contentment has been extensively researched Researchers have discovered that happy feelings like pleasure, excitement, and delight increase consumer satisfaction whereas negative feelings like wrath, impatience, and disappointment decrease it (Oliver, 2010) The evaluation of the pros and cons of a product or service is at the heart of the idea of perceived value Customers are more satisfied with a product or service if they believe they are getting good value for their money (Sirdeshmukh, Singh, & Sabol, 2002)

The purpose of this study is to expand on the work of Kim and Hyun (2011) and examine how customer happiness affects loyalty in the Korean cosmetics industry This research looks at the connection between happy customers and repeat business in Pakistan's cosmetics sector The research builds on previous work by Hussain et al (2017) and concludes that pleased customers are more loyal ones Wang and Chen (2017) analyzed the cosmetics business in China and found that customer loyalty was correlated with consumer happiness The purpose of this research is to examine how customer happiness correlates with brand loyalty in the Malaysian cosmetics industry The study does this by building on the work of Yan and Wu (2017), who discovered a link between happy customers and repeat business The study takes a quantitative research technique, interviewing a small subset of Malaysian cosmetics buyers using a questionnaire In order to ascertain the nature and direction of the connection between customer pleasure and loyalty, we will use statistical methods to examine the obtained data The results of this research will add to our understanding of consumer habits and give guidance to the cosmetics industry on how to increase client loyalty and happiness According to this study's results, cosmetics stores may learn a lot about how to foster client loyalty by focusing on their customers' level of happiness with their purchases The research team

13 behind this project hopes to learn how much of an effect providing high-quality goods and services that are tailored to individual customers has on their happiness and loyalty

H5: Customer pleasure increases brand loyalty

Maintaining a loyal customer base is crucial to a company's long-term performance and bottom line Several research on client dedication are analyzed in this literature review According to Oliver (1999), customer loyalty is "a deeply held commitment to rebuy or repatronize a preferred product/service consistently in the future, thereby causing repetitive same-brand or same-brand-set purchasing," even when given the opportunity to switch brands Customer loyalty was shown to be largely influenced by factors like customer happiness, trust, and perceived value

Reichheld and Sasser (1990) conducted another research showing a favorable correlation between customer loyalty and financial success Customer happiness, trust, and perceived value, as well as customer retention strategies, were all shown to contribute to an increase in client loyalty Customer happiness and perceived quality were revealed to be significant predictors of customer loyalty in a research conducted by Homburg and Giering (2001) Effective customer relationship management (CRM) methods were also proven to boost client loyalty, according to the research

According to research conducted by Chen and Chang (2013) in the cosmetics business, customer loyalty is increased when they are pleased with the product's quality, the service's quality, and the value they get Customer loyalty was shown to have a favorable association with both the likelihood of future purchases and the spread of good reviews According to studies (Oliver, 1997; Reichheld & Sasser, 1990), happy customers are more likely to return Those who are pleased with the product or service they get from a business are more inclined to stick with that business in the future Sirdeshmukh, Singh, & Sabol (2002) and Bansal, Taylor, & James (2005) both found that trust and perceived value played a substantial influence in maintaining consumer loyalty Customers are more likely to stick with a firm over the long term if they have faith in its brand and appreciate its offerings

14 Bowden (2009), as well as Vivek, Beatty, and Morgan (2012), find that a high level of consumer involvement is correlated with a high level of customer loyalty, consumers that identify strongly with a brand and have an emotional connection to that brand are engaged consumers People in this category are more inclined to stick with a brand despite attractive alternatives Moreover, studies have shown that different marketing tactics, such as loyalty programs (Bolton, Kannan, & Bramlett, 2000; Yi & Jeon, 2003), CRM (Hennig-Thurau, Gwinner, Walsh, & Gremler, 2004), and brand personality (Aaker, 1997; Park, MacInnis, Priester, Eisingerich, & Iacobucci, 2010), can all have an effect on customer loyalty

The theory of planned behavior (TPB) is a widely used framework in consumer behavior research that explains how attitudes, subjective norms, and perceived behavioral control influence individuals' intentions and subsequent behavior In the context of ethical marketing, TPB can be used to understand how ethical marketing practices can affect customers' attitudes, satisfaction, and loyalty towards a brand or product

Several research studies have employed the Theory of Planned Behavior (TPB) to investigate the connection between ethical marketing, attitude, satisfaction, and customer loyalty For instance, in a study conducted by Chang and Chen in 2015, it was discovered that a positive attitude towards ethical marketing practices had a favorable influence on customer satisfaction and loyalty, particularly in the context of green products Similarly, another study conducted by Kim and Choi in 2017 revealed that the perceived ethicality of a brand had a positive impact on customer loyalty through the pathway of customer satisfaction Furthermore, TPB has been utilized to examine the role of subjective norms and perceived behavioral control in the relationship between ethical marketing and customer behavior For example, Yousafzai, Pallister, and Foxall's study in 2010 found that subjective norms and perceived behavioral control significantly influenced the intention to purchase ethical products

In a study conducted by Kim and Park in 2019, it was discovered that constructs of the Theory of Planned Behavior (TPB), including attitude, subjective norms, and perceived behavioral control, exhibited a positive relationship with consumers' intentions to

15 purchase ethical cosmetics products Similarly, another study conducted by Nguyen and Nguyen in 2018 employed TPB to examine the impact of ethical advertising on consumers' attitudes towards the advertising The findings revealed a positive association between attitude towards the advertising and consumers' purchase intention

Figure 1.1: Theory of planned behavior model (Ajzen, 1991)

The cosmetics industry is a rapidly growing sector of the global economy, driven by increasing demand for beauty and personal care products The industry encompasses a wide range of products, including makeup, skincare, hair care, and fragrance, among others One of these is the increasing demand for natural and organic products, driven by consumer concerns over the safety and environmental impact of conventional cosmetics (Ganesan, 2018) Another trend is the rise of social media and influencer marketing, which has transformed the way that consumers discover and engage with beauty products (Khamis et al., 2017)

However, the cosmetics industry also faces several challenges related to ethical and sustainable business practices These include concerns over animal testing, use of toxic ingredients, and the impact of packaging waste on the environment (Luchs et al., 2010) In response, many companies have adopted ethical marketing practices and have started to develop more sustainable and eco-friendly products Research has also shown that consumers are increasingly concerned with the ethical and sustainability practices of the

16 companies they buy from, including those in the cosmetics industry (Luchs et al., 2010) As a result, ethical marketing has become an important tool for companies to communicate their commitment to social and environmental responsibility, which can enhance brand loyalty and increase consumer trust (Kim et al., 2017)

Understanding customer behavior is essential for marketers because it reveals how consumers make decisions and can be used to hone marketing approaches In the following literature review, we'll be looking at many different facets of consumer behavior and referencing the sources that we used The impact of social media on consumers' buying habits is one facet of consumer behavior Kim and Ko (2012) argue that social media's ability to disseminate product information and user evaluations has a substantial impact on consumer behavior Social media, according to Wang and Yu (2012), is a powerful medium for expanding consumers' exposure to a brand and altering their subsequent actions

Brand reputation is another aspect that plays a role in shaping consumer actions Yoo and Donthu (2001) discovered that people are more likely to buy from a company after hearing good things about it from friends and family The confidence consumers have in a company's products or services is another factor that might affect sales Research by Homburg, Schwemmle, and Kuehnl (2015) shows, for instance, that consumers are prepared to pay a premium for what they consider to be a high-quality product Emotions have also been investigated for their potential impact on consumer behavior Bagozzi, Gopinath, and Nyer (1999) argue that consumers' sentiments about a product or brand might impact their purchasing decisions It has also been established that customer satisfaction is a strong predictor of consumer loyalty and advocacy, as well as future purchases (Anderson and Sullivan, 1993) Last but not least, research has been conducted on how customer service might affect a company's bottom line Customer loyalty and favorable word-of-mouth are boosted by providing excellent service, as stated by Grönroos (2004)

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Millennials, or those born between the early 1980s and the mid-1990s, are part of Generation Y The distinctive traits and habits of this generation have made them a focus of study and marketing

Research has shown that Generation Y is highly diverse and values individuality, authenticity, and social responsibility (Twenge et al., 2010) They are also more technologically savvy and connected than previous generations, with a strong preference for digital communication and social media (Pew Research Center, 2019) In terms of consumer behavior, Generation Y is known for their desire for unique and personalized experiences, and their willingness to pay more for ethical and sustainable products (Nielsen, 2015) They are also more likely to engage in online shopping and research before making a purchase (Pew Research Center, 2019)

People born between the late 1990s and the early 2010s make up Generation Z, or Gen Z They are the first truly digital generation, born knowing how to connect, interact, and consume information via the internet and related platforms Because of this, they now see goods and services differently, including cosmetics Generation Z is more socially aware than previous generations, and they have pushed the cosmetics industry to produce items that reflect their ideals

Studies have shown that Generation Z consumers place a high value on authenticity, transparency, and sustainability in their purchasing decisions (Nunes et al., 2020) They are more likely to support brands that have a strong social and environmental mission and are willing to pay a premium for products that are ethically produced (Muñiz and Schau, 2018) However, Generation Z consumers also value convenience and personalization, and expect brands to use data and technology to personalize their shopping experience (McCormick et al., 2020) In terms of their beauty preferences, Generation Z consumers tend to favor natural and minimalistic looks, and are more likely to experiment with gender-neutral or gender-fluid products (Pikkarainen et al., 2021) They also rely heavily on social media and influencers for product recommendations and inspiration, and are more likely to purchase products that are popular among their peers (Dholakia et al., 2020)

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2.10 Proposed research model

Based on the literature review, the proposed research model for the study on the impacts of ethical marketing practices on customer satisfaction and loyalty on cosmetics products among Generation Y and Generation Z consists of several key factors These factors include price fairness, product fairness, customer expertise, customer attitude, customer satisfaction, and customer loyalty

The purpose of this research is to examine how customers' perceptions of pricing and product fairness influence their pleasure and loyalty to a brand The function of customer expertise in mediating the connection between pricing fairness, product fairness, and customer attitude will also be investigated.According to the suggested study model, a beneficial effect on customer satisfaction and loyalty may be traced back to the company's fair pricing and fair treatment of its products Customer knowledge should also attenuate the association between price and product fairness and satisfaction

Customer attitude

Customer satisfaction

Customer loyalty

• Concluding with research findings and providing suggestions for further study and for professionals in the cosmetics sector

When doing research, we use a methodical and organized approach to data collection and analysis in order to get to the bottom of our questions and meet our goals

To gather data, we used a web-based questionnaire The respondents ranging in 03 big cities in Vietnam which are Hanoi, Da Nang and Ho Chi Minh City The reason for choosing the aforementioned cities was that, Vietnam's cosmetics business has quickly become one of Southeast Asia's most competitive Consumers in Vietnam are growing more interested in items that do more than just meet their most basic requirements, such as those that promote health and wellness or enhance their appearance (Vietnambriefing.com)

20 There were two types of sampling used: the snowball and the convenient We opted for the snowball technique since this method is useful in research in the social sciences: a discipline that depends on recruiting as many people as possible so that researchers may learn as much as possible about their study's population of interest

For the purpose of this research, the study will involve individuals belonging to Generation Z (born between 1997-2012) and Generation Y (born between 1981-1996) who are consumers of cosmetics products The recruitment of participants will be conducted through online surveys and social media advertisements To ensure a diverse sample, participants will be selected based on criteria such as age, gender, and geographical location The sample size will be determined using a power analysis to ensure adequate statistical power for the study Participation in the research will be voluntary, and participants will receive information about the study's objectives, procedures, and their rights as research subjects Confidentiality and anonymity of the participants will be strictly maintained throughout the study

The participants will be selected based on certain criteria The participants for the study will be individuals who are currently using or have used cosmetics products in the past The inclusion criteria for the study are:

 Age between 11-40 years old

 Belongs to either Generation Z or Y  Regular user of cosmetics products

 Have purchased cosmetics products in the last 6 months  Ability to read and comprehend English

Participant information will be treated with strict confidentiality, and their anonymity will be safeguarded by assigning unique identification numbers The data collected will be utilized exclusively for research purposes and will not be disclosed to any external entities or third parties

To gather data for this study, surveys will be administered using online platforms such as Google Forms and SurveyMonkey The survey will be carefully designed to capture

21 information on the variables under investigation, including ethical marketing practices, customer satisfaction, and loyalty The survey questions will be developed in alignment with the research objectives and the proposed research model To ensure the survey's validity and reliability, a pilot study will be conducted with a small group of participants The feedback from the pilot study will be utilized to enhance the survey design and address any potential issues with the questions or response options

The survey would be distributed to the selected sample of participants using a convenience sampling method The sample size would be determined based on statistical power analysis, taking into consideration the number of variables, effect size, and desired level of significance The collected survey data will be subjected to analysis using statistical software such as SPSS Descriptive statistics, including means and standard deviations, will be utilized to provide a summary of the data Inferential statistics, such as correlation and regression analysis, will be employed to test the hypotheses and examine the relationships between variables

The research model consists of several factors To assure the validity of these constructs, all measurement items were adapted from existing research and modified to suit the social networking context All variables' measures were adapted and created before being translated into Vietnamese for data collection

Table 3.1: Likert 5-point scale

Strongly disagree

Table 3.2: Measurement scale

Constructs Number of items

22 Health

consciousness

HC1 I care more about my health than almost all of my friends

Kim, S., & Seock, Y K (2009,

November) HC2 I like to use face care products on a daily

basis to keep my face healthy and beautiful

HC3 I often buy "health-improving cosmetics" or "natural or eco-friendly cosmetics."

Price fairness PF1 A face care product should be clear about all of its extra costs and benefits

Pranav Kumar & Sany Sanuri Mohd Mokhtar, 2016

PF2 A solution for my face should give me all the benefits I expect from using it PF3 Prices for face care items shouldn't be

too high or too low

PF4 The full price of face care items should be shown before they are bought

Product fairness

PRF1 The skin care items should be safe and good for what they're made for

Pranav Kumar & Sany Sanuri Mohd Mokhtar, 2016

PRF2 Information should be given about all of the major risks that come with the face care product

PRF3 I like to buy face care products from stores where the salespeople treat me with respect

PRF4 Any change to a product's parts that could make a big difference or affect a buyer's decision to buy should be made clear

23 Consumer

attitude

CA1 When I buy a product for my face, I'm afraid I might pay too much

Parul Oberoi, Prerna Oberoi (2018)

CA2 I can't try out the real skin care product before I buy it

CA3 I'd rather buy a cream for my face that seems to have less dangerous ingredients

CA4 Most makeup haven't gotten better in quality over the past few years

CA5 If there isn't much information about a face care product, I'm less likely to buy it

Customer satisfaction (1 question)

Herrmann, Lan Xia, Kent B Monroe, Frank Huber (2007) Customer

loyalty

(intention of repurchasing and intention of

recommendation)

CL1 I tell other people good things about the item

Vithya Leninkumar (2008)

24

This study uses a Likert scale to measure the opinions of research subjects so that we can learn more about what makes people decide to buy furniture for their homes (Harry N Boone, Jr A Boone, 2012) It is a set of reviews with at least four things so that users can choose their level of involvement Jacoby and Mattel (1971) said that the Likert scales meet the standards for test or repeat reliability, parallel validity, and prediction validity The Likert scale was used in this study because, according to Peabody and Cronbach (1962), the direction component of the total numbers is more important than the strength component This study is helpful because it is focused on what the person does Also, the Likert scale is the best way to measure people's opinions, knowledge, views, values, and actions

The primary aim of designing this research questionnaire was to ensure its simplicity and ease of understanding for the participants This approach aligns with the recommendation put forth by Easterby-Mith et al (2008), who asserted that shorter and simpler questionnaires have a higher probability of eliciting responses from individuals Moreover, the questionnaire was initially developed in English and later translated into Vietnamese to cater to Vietnamese respondents The questions in the questionnaire were derived and adapted from similar inquiries used in previous studies

The questionnaire used in this study comprised of 02 sections

- The introduction section contained ten questions requesting demographic information

- The second section consisted 19 measuring items of 6 constructs including health consciousness, price fairness, product fairness, consumer attitude, customer satisfaction, customer loyalty

Every item in the questionnaire will be evaluated using a 5-point Likert scale, where respondents can indicate their level of agreement or disagreement with each statement The scale consists of the following options:

1 Strongly disagree 2 Disagree

25 3 Neutral

4 Agree

5 Strongly agree

The present study utilized the SPSS software to conduct data analysis, owing to its versatility in managing sample size and measurement model construction Upon collating the outcomes of the online questionnaires, each individual item of the questionnaire was assigned a code (See Appendix)

In this study, descriptive statistics, frequency tables, reliability tests of scales, experimental analysis, and regression are used along with SPSS software to do a full analysis of the data

The Cronbach Alpha coefficient serves as a widely utilized index to evaluate the

internal consistency of a direct scale Its purpose lies in determining whether the questions within the scale exhibit a similar structure In this study, our aim is to explore the relationship between Cronbach's Alpha coefficient and internal consistency Our specific hypothesis suggests that a higher value of Cronbach's Alpha coefficient indicates a higher level of internal consistency Prior to conducting exploratory factor analysis (EFA), it is essential to implement the Cronbach's Alpha reliability coefficient method This step plays a crucial role in eliminating unsuitable variables that could potentially lead to the formation of spurious factors, as noted by Nguyen Dinh Tho and Nguyen Thi Mai Trang in their work from 2007

The Cronbach's Alpha reliability coefficient is a statistical measure that evaluates the degree of correlation among variables being measured However, it does not offer guidance on which variables should be retained or eliminated from the analysis To address this concern, an approach suggested by Hoang Trong and Chu Nguyen Mong Ngoc in 2008 recommends utilizing the variable-total correlation coefficient This approach aids in eliminating variables that do not significantly contribute to the

26 measured concept The assessment of scale dependability relies on the criteria employed during the evaluation process

Correlation analysis The present study incorporates Pearson correlation analysis with

a focus on scales that have undergone satisfactory evaluation The present study employed Pearson correlation analysis to validate the linear association between the dependent and independent variables, thereby establishing the suitability of linear regression analysis The Pearson correlation coefficient (r) is a statistical measure that falls within the range of (-1,+1) The proximity of the absolute value of r to 1 is indicative of a strong correlation between two variables According to Hoang Trong and Chu Nguyen Mong Ngoc (2008), a correlation coefficient of r = 0 suggests the absence of a linear association between the two variables

Table 4.1: Description of respondents’ profile