Antecedents and consequences of status consumption

UNIVERSITY OF ECONOMICS HO CHI MINH CITY International School of Business Vo Thi Thu Trang ANTECEDENTS AND CONSEQUENCES OF STATUS CONSUMPTION: EVIDENCE FROM VIETNAM MASTER OF BUSINESS (Honours) Ho Chi Minh City - Year 2014 UNIVERSITY OF ECONOMICS HO CHI MINH CITY International School of Business Vo Thi Thu Trang ANTECEDENTS AND CONSEQUENCES OF STATUS CONSUMPTION: EVIDENCE FROM VIETNAM ID: 22120078 MASTER OF BUSINESS (Honours) SUPERVISOR: Dr. NGUYEN THI MAI TRANG Ho Chi Minh City - Year 2014 Page | 1 CONTENTS ABBREVIATION 5 ACKNOWLEDGEMENT 6 ABSTRACT 7 CHAPTER 1 - INTRODUCTION 8 1.1 Background to the research 8 1.2 Research problem 9 1.3 Research objectives 12 1.4 Methodology 13 1.5 Research Structure 13 1.6 Research scope 14 CHAPTER 2 - LITERATURE REVIEW AND HYPOTHESES 15 2.1 Literature review 15 2.1.1 Collectivism and Individualism 15 2.1.2 Materialism 17 2.1.3 Status Consumption 18 2.1.4 Life satisfaction 19 2.2 Research hypotheses 19 2.3 Conceptual model 23 2.4 Summary 24 CHAPTER 3 - METHODOLOGY 25 3.1 Research design 25 3.1.1 Research process 25 3.1.2 Measurement scales 26 Page | 2 3.2. Measurement refinement 29 3.3 The quantitative study 30 3.3.1 Sampling and data collection 30 3.3.2 Data analysis 30 3.4 Summary 30 CHAPTER 4 - DATA ANALYSIS AND RESULTS 32 4.1 Data collection 32 4.2 Respondents’ demographics 32 4.3 Descriptive statistic 34 4.4 Confirmatory factor analysis (CFA) 34 4.4.1 CFA for the first-order constructs 35 4.4.2 CFA for second-order construct 39 4.4.3 CFA for the final measurement model 40 4.5 Structural equation modeling (SEM) 44 4.6 Bootstrap method 47 4.7 Discussion 48 4.8 Summary 53 CHAPTER 5 CONCLUSION, IMPLICATIONS, AND LIMITATION 55 5.1 Conclusions about hypotheses and research problem 56 5.2 Implications for theory and managerial implications 60 5.3 Limitations and further research 62 REFERENCES 64 APPENDICES 69 Page | 3 LIST OF FIGURES Figure 1.1 Population Pyramid of Vietnam 11 Figure 2.1 Conceptual model 23 Figure 3.1 Research process 26 Figure 4.1 CFA model of collectivism 36 Figure 4.2 CFA model of individualism 36 Figure 4.3 CFA model of life satisfaction 37 Figure 4.4 CFA model of status consumption 37 Figure 4.5 CFA model of materialism 39 Figure 4.6 Final measurement model 43 Figure 4.7 Structural results (standardized estimates) 45 LIST OF TABLES Table 4.1 Source of data collection 32 Table 4.2 Respondents’ characteristics 33 Table 4.3 Descriptive statistic: Eliminated items 34 Table 4.4 Summarized of p vc and p c (first order constructs) 38 Table 4.5 Summarized of p vc and p c (second order construct) 40 Table 4.6 Correlations (of Materialism) 40 Table 4.7 Summary of p vc and p c (final measurement model) 41 Table 4.8 Correlations (final measurement model) 42 Table 4.9 CFA Summary of eliminated item 42 Table 4.10 Unstandardized structural paths 44 Table 4.11 Measurement validation 46 Table 4.12 Regression Weights (bootstrap standard errors) 47 Table 4.13 Removed items 53 Page | 4 LIST OF APPENDICES Appendix A List of in-depth interviews’ participants 69 Appendix B In-depth Interview’ refinement measurement scale 69 Appendix C Questionnaire (English Version) 73 Appendix D Questionnaire (Vietnamese Version) 78 Appendix E Descriptive statistics 83 Appendix F Summarized results of Confirmatory factor analysis 84 Appendix G Standardized Regression Weights (Final measurement model) 89 Appendix H Final measurement scales 90 Page | 5 ABBREVIATION CIEM Central Institute for Economic Management CFA Confirmatory Factor Analysis GDP Gross Domestic Product GSO General statistics Office of Vietnam LS Life satisfaction MAT Materialism MOIT Ministry of industry and trade of the socialist republic of Vietnam MVS Material values scale RS Gross retail sales of goods and services SC Status consumption SEM Structural equation modeling SPSS Statistical Package for the Social Sciences TE Transitional economy VAMA Vietnam Automobile Manufacturers' Association Page | 6 ACKNOWLEDGEMENT At first, I would like to express my deep gratitude to my supervisor Dr. Nguyen Thi Mai Trang for her professional guidance, dedicated support, valuable suggestions, instructions, and encouragements during the time of doing my research. Secondly, I would like to express my appreciation to Prof. Nguyen Dong Phong, Prof. Nguyen Dinh Tho, Dr. Tran Ha Minh Quan, Dr. Nguyen Phong Nguyen, and Dr. Tran Phuong Thao for their valuable time as the members of the ISB research committee. Their comments and meaningful suggestions are significantly contributed to this research completion. Finally yet importantly, my sincere thanks are given to all of my teachers at International Business School – University of Economics Ho Chi Minh City for their teaching and guidance during my Master course. Page | 7 ABSTRACT In the Vietnam context after Doimoi, Vietnam was one of the TEs nations strongly affected by culture transitions, young population, economic and population growth. The author uses research methods in marketing with an expectation of at first, investigating the influence of following factors: collectivism, individualism, and materialism on the consumption behavior – status consumption and the life satisfaction; secondly, strengthening evidence in Vietnam; thirdly, pointing out useful practical and managerial implications, which support the nation and enterprises to understand consumers’ needs. Using the data collection of 427 respondents, the author found that life satisfaction is motivated by status consumption, which is motivated by collectivism, individualism, and materialism. Furthermore, the results indicated that collectivism and individualism have a positive influence on materialism and coexist in Vietnamese consumers. These findings suggest that the companies should carefully consider the culture elements of their products or services, in order to segment the customers and to plan an adequate strategy. Besides, the policy markers should state out the policies, which based on the real demand of status consumption in Vietnam market, in order to increase the life satisfaction of their citizens. Key words: status consumption, collectivism, individualism, materialism, life satisfaction Page | 8 CHAPTER 1 - INTRODUCTION 1.1 Background to the research From Doimoi (Economic Renovation) policy of government in 1986, the new components of economy have formed. Hence, the role of organizations and individuals in providing goods and service is continuously developing. The open-door policy attracts huge amount of investment from another developed country (Central Institute for Economic Management, 2012). The new economic reformation in Vietnam has dramatically changed the retailing industry. A retail sale of goods and services is an important indicator of GDP and is the motivation of Vietnam economy. This indicator also reflects the consumption capability of domestic customers. Along with economic reformation, in 2008, Vietnam became a lower-middle-income economy and retail sales index rapidly grew up from 0.7 bill VND in 1985 to 2325 bill VND in 2012 (General Statistic Office of Vietnam, 2012). Total retailed sales of consumer goods and services in the first nine months of 2014 rose by 11.1% from the same period in 2013. If the factor of inflation was excluded, it would be 6.2%. Totally, retailed sales of goods went up by 10.7%, accommodation and catering services by 11.9%, traveling service by 17.4% (General Statistic Office of Vietnam, 2014) and other services by 12.5%. This was resulted from many factors, such as the increase in population (up to 1% per year), the young population of "golden age", the growing proportion of middle class, government open-door policies, the increasing of foreign investments, and social exchange resulting in social-psychology shift on consumer values, attitudes and behaviors (Phng Dung, 2013). In depth, some of these change values are materialism, self-perception (individualistic self and collectivistic self), sense of life satisfaction, and status consumption. Many studies, which are related to materialism, have been investigated all over the world, essentially the relationship between materialism and consumption behavior; the differences of materialism either between collectivistic culture and individualistic culture; or between various demographic variables (age, gender, generation, etc.) (Flynn et al., 2013; Otero-Lopez et al., 2011; Olivia et al., 2012; Sharma, 2011…). Among consumption behaviors, previous studies explore the impact of materialism on compulsive consumption [...]... t i Vi t Nam 2014 auto sales likely to rise 9% year on year - - - - - Chapter 1: Introduction Chapter 2: Literature Review and Hypotheses Chapter 3: Methodology Chapter 4: Research Results Chapter 5: Conclusions, Implications and Limitations Status consumption Collectivism and individualism Materialism Success Centrality Happiness Life satisfaction . (collectivism and individualism) and status consumption; - The relationship between materialism (success, centrality, and happiness) and status consumption; - The relationship between status consumption. those related to consumption for the sake of status. 1.3 Research objectives The overall objective of this study is to examine some antecedences and consequences of status consumption in the. UNIVERSITY OF ECONOMICS HO CHI MINH CITY International School of Business Vo Thi Thu Trang ANTECEDENTS AND CONSEQUENCES OF STATUS CONSUMPTION: EVIDENCE FROM VIETNAM MASTER OF