Elements influencing on toyota automobile purchase decision of customers in ho chi minh city

RESEARCH OBJECTIVES The study was guided by the following specific objectives: 1.3.1 To determine the economic factors affecting consumer purchasing decisions in Ho Chi Minh city for To

RESEARCH PROJECT (BMBR5103)

ELEMENTS INFLUENCING ON TOYOTA AUTOMOBILE PURCHASE DECISION OF CUSTOMERS IN HO CHI MINH CITY

STUDENT ‘S FULL NAME : PHAM LY THIEN

STUDENT ID : CGS00018497

INTAKE : MBAOUMK15A

ADVISOR’S NAME & TITLE : A Prof PHAN DINH NGUYEN

December 2015

ADVISOR’S ASSESSMENT

Advisor’s signature

ACKNOWLEDGEMENTS

This research paper is made because of my passionate dedication to the continually growing Automobile industry in Vietnam in the year to come I would reserve a special thanks to Mr Aruth, who took me to the Automobile business industry in Vietnam 10 years ago and whom I lost contact My thankful words would fly to Assoc Pro Dr Nguyen Phan, who has instructed me during the course of this research I also express my thankfulness to Hutech and Malaysia Open University without whom my dream of getting

an MBA would not have come true

This research would not have been done without great sacrifices from my family members, who have been unconditionally motivating and supporting me during the last 15 months of the MBA program Besides, all the classmates are another stream of encouragement for me

to get inspired of this program

Pham Ly Thien

December 2015

in Ho Chi Minh city

It was important to understand the little things that consumers use as the basis for making a judgment of when it comes to purchasing decisions The study recommends the need for automobile companies to consider consumers‟ demographic characteristics such as age, gender, marital status, occupation, education and income when designing the products to offer into the Ho Chi Minh city market This is because demography factors are vital and measurable statistics of a population that helps to locate target market, they are easier

to measure and are suitable for psychographic and socio-cultural studies Additionally demographic factors have a huge impact on the assessment of different features which are generally associated with consumer behaviour

CONTENTS

ADVISOR‟S ASSESSMENT

ACKNOWLEDGEMENTS

ABSTRACT

LIST OF TABLE 3

CHAPTER 1 INTRODUCTION 6

1.1 BACKGROUND 6

1.2 PROBLEM STATEMENT 10

1.3 RESEARCH OBJECTIVES 12

1.4 RESEARCH QUESTIONS 13

1.5 SCOPE OF STUDY 13

1.6 DEFINITION OF TERM 14

1.7 RESEARCH STRUCTURE 15

1.8 CHAPTER OVERVIEW 15

CHAPTER 2 LITERATURE REVIEW 17

2.1 INTRODUCTION 17

2.2 ECONOMIC FACTORS 17

2.2.1 Level of Income 17

2.2.2 Interest Rate 19

2.2.3 Fuel Prices 20

2.2.4 Price of Car 20

2.3 PSYCHOLOGICAL FACTORS 22

2.3.1 Perception 25

2.3.2 Learning 26

2.3.2 Related Utilities 26

2.4 SOCIAL – CUTURAL FACTORS 27

2.4.1 Religion 29

2.4.2 Family 29

2.5 DEMOGRAPHIC FACTORS 30

2.5.1 Gender Differences 31

2.5.2 Age Differences 32

2.5.3 Changing Life Events 33

2.6 PURCHASE DECISION 34

2.7 CONCEPTUAL FRAMEWORK 34

2.8 CHAPTER SUMMARY 35

CHAPTER 3 RESEARCH METHODOLOGY 36

3.1 INTRODUCTION 36

3.2 REASEARCH DESIGN 36

3.3 POPULATION AND SAMPLING DESIGN 37

3.3.1 Population 37

3.3.2 Sampling Design 37

3.4 DATA COLLECTION METHODS 38

3.5 RESEARCH PROCEDURES 39

3.6 DATA ANALYSIS METHODS 39

3.7 CHAPTER SUMMARY 40

CHAPTER 4 RESULTS AND FINDINGS 41

4.1 INTRODUCTION 41

4.2 BACKGROUND INFORMATION 41

4.3 ECONOMIC FACTORS AND PURCHASING DECISION 47

4.4 PSYCHOLOGICAL FACTORS AND PURCHASE DECISION 49

4.5 SOCIAL-CULTURAL FACTORS AND PURCHASE DECISION 51

4.6 DEMOGRAPHIC FACTORS AND PURCHASE DECISION 53

4.7 HYPOTHESES TESTING BY MULTIPLE REGRESSION 58

4.8 CHAPTER SUMMARY 58

CHAPTER 5 DISCUSSION, CONCLUSION AND RECEMMENDATIONS 59

5.1 INTRODUCTION 59

5.2 SUMMARY 59

5.3 DISCUSSION 60

REFERENCES 70

Appendix 1: English questionnaire 73

Appendix 1: Vietnamese questionnaire 78

1.0 INTRODUCTION

1.1 BACKGROUND TO THE STUDY

Consumer behavior is regarded to be that particular the action which an individual takes in the process of purchasing and using products and services This process also includes the mental as well as the social processes which come before these actions It means therefore that one of the biggest challenges facing businesses is the process of predicting and understanding consumer behavior At present, the competitive market forced producers to produce goods based on customer needs (Tafler, 2014) The study of consumer purchase behavior, which was initially known as consumer behavior, offers relevant information regarding consumers and their consumption patterns

An organization can actually survive if it can be able to supply consumer needs and demands with a comprehensive understanding of them This means therefore that there is need to study consumer behavior In this regard, there is need to understand consumer behavior which is not so simple Customers likely do not know their own deeper inner motivation or they are likely therefore to react to affecting factors in the last moment, and this can simply change their mind However, marketers need to consider their customers‟ requests, intakes and buying behaviors (Kotler, 2009)

Knowledge of consumer behavior is therefore considered to be very essential if organizations seek to gain commercial success The relationship between consumer behavior as well as marketing strategy is very much emphasized since the success of

companies‟ marketing strategies depends on how well managers‟ understand of consumer behaviour (Kotler, 2009)

Consumer buyer behavior is regarded to be the multi-step decision-making process where people take part in it and it also include the actions consumers take to satisfy their needs and wants in the marketplace The study of customer behaviour is therefore mainly focused on consumer buying behaviour, in that the customer plays three essential roles: user, payer as well as buyer (Kotler, 2009)

According to previous studies conducted on consumer behavior it has not been easy to predict what goes through the mind of the consumers during the purchase decision This is because it involves the psychological processes which consumers undergo in recognizing their needs, while seeking ways to solve these needs, making purchase decisions, interpreting information, making plans, and finally implementing these plans

One of the most fundamental assumptions in the study of consumer behaviour is that indeed individuals often buy products on the basis of their perceived values as compared

to their primary functions (Stávková, Stejskal & Toufarova, 2009) This however is not to say that that the main functions of the products are not essential However it simply means that the contemporary duty of a product is more when compared to its basic use-value In most cases, consumers do not rate products in relations to their core attributes but, rather according to the so-called real product as well as the extended product, which simply represents a set of intangible factors, which confer a desired perceived advantage

on the consumer and which includes; image consultancy, and after-sale service (Foret

& Procházka, 2009)

Consumer buying behavior is often unconsciously affected by some factors For instance social factors play an essential role when it comes to the decision of buying certain products, including the most sensitive products such as cars The important social factors are: reference groups, family, role and status There are four important psychological factors affecting the consumer buying behavior: perception, motivation, learning and beliefs and attitudes The economic factors that most commonly affect consumer behavior include occupation, economic situation and personality (Blythe, 2009)

Successful businesses are well aware of how to leverage the different factors that influence consumer buying behavior in order to effectively market their products and as such maximize sales Studies have revealed that there are generally four main factors that play a role in the consumer's buying behavior The factors include cultural factors, social factors, personal factors and psychological factors (Blackwell et al., 2001) This study therefore sought to explore of the four main factors that influence consumer buying behavior of the automotive

A study done by Havkinze, Roger & Kenth (2009) was able to establish that the consumer‟s disposable income is indeed very essential when it comes to determining what

to buy and in what quantities, however this mostly depends on the income elasticity of a certain product In the event that the consumers disposable income increases and that the income elasticity of demand for that good is greater than one then the proportional rise in

the demand for that product is greater than the rise in income levels Their study also reported that the influence of culture on buying behavior varies from country to country therefore marketers have to be very careful in analyzing the culture of different groups, regions or even countries

Peter & Olson (2009) are of the opinion that customer possesses specific belief and attitude towards various products This is because such beliefs and attitudes are what comprises brand image and therefore affect consumer buying behavior In this regard, it is important for marketers to change the beliefs and attitudes of customers through the launch of special campaigns

According to Experts, Vietnam‟s automotive industry will have the fastest growth in Southeast Asia over the next 20 years This growth will be the result of increasing consumer demand, a young workforce, and strong governmental support for the industry

It has been predicted that Vietnam‟s automotive industry will annually produce 220,000 units by 2016 and 1.5 million units by 2020 Vietnam‟s Automobile Manufacturers‟ Association (VAMA) has produced similarly rosy numbers

In 2014, there were 157,810 vehicles sold in the country, this was a 43 percent year on year increase Breaking these numbers further down, there was a 43 percent increase in the sale of personal cars, with 100,000 units sold, and a 42 percent increase in truck sales, with 57,371 vehicles sold

The Automotive industry in Vietnam in general, and in Ho Chi Minh City in particular is primarily involved in the retail and distribution of motor vehicles There are a number of motor vehicle dealers operating in the country, with the most established being There are also three vehicle assembly plants in the country, which concentrate on the assembly of pick-ups and heavy commercial vehicles

The main brands category from Toyota Vienam sold in Ho Chi Minh City are; Corolla, Toyota 86, Yaris, Vios, Camry, Innova Fortuner, Prado, Hilux, Hiace and Land Cruiser Toyota Vietnam employs approximately 1,900 employees in the various branches Data from the Vietnam Automotive Manufacturers Assosiation (VAMA) shows that Toyota‟s market share is more than 50 per cent

1.2 PROBLEM STATEMENT

The behavior of the consumer with regard to purchase of automotive is affected by various factors that are uncontrollable; cultural, social, personal and economical and psychological factors These factors cause consumers to develop products and brand preferences Although many of these factors cannot be directly controlled by marketers, understanding

of their impact is essential as marketing mix strategies can be developed to appeal to the preferences of the target market (Ahmed and d‟Astou, 1993)

Today‟s competitive world chance of survival of automotive companies is related to continually providing its customers‟ satisfaction and to attract their loyalty and support Knowing the factors that unconsciously affect the decision to purchase something can have positive effects on supplying the customers with better products Consumer behavior

means more than just how person buys products Marketing efforts therefore also focus on consumer‟s consumption of services, activities and ideas The manner in which consumer buys is extremely important to marketers It involves understanding the set of decisions (what, why, when, how much and how often) that consumer makes over the time (Hoyer 2004) It is important to know how consumer reacts towards different product features, price, and advertisement, in order to ensure strong competitive advantage (Khachaturian and Morganosky, 1990) and (Ahmed and d‟Astou, 1993)

Toyota is no exception for every potential buyer has to consider various factors before a purchase of their product For the company to remain competitive in the motor industry in Vietnam; there is need for the management to understand their customers buying behavior towards their automotive brands as well as how consumer reacts towards different product features, price, and advertisement, in order to ensure strong competitive advantage

However, there has been not enough research into the way customers making decision to buy cars as well as which major factors have got relationship with customer decision

In practice, beside of problems raised above, there are many limitations that the thesis would study after defining and collecting opinions and contribution through research methodology conduct This research is supported to capture the key factors influence on demand of people in choosing Toyota cars for driving in HCM City

This study, therefore sought to fill this information gap by investigating the factors that influence customer buying behavior of the motor industry

1.3 RESEARCH OBJECTIVES

The study was guided by the following specific objectives:

1.3.1 To determine the economic factors affecting consumer purchasing decisions in

Ho Chi Minh city for Toyota Automobile

1.3.2 To examine the psychological factors affecting consumer purchasing decisions in Ho Chi Minh city for Toyota Automobile

1.3.3 To examine the social-cultural factors affecting consumer purchasing decisions in

Ho Chi Minh city for Toyota Automobile

1.3.4 To analyze the demographic factors affecting consumer purchasing decisions

in Ho Chi Minh city for Toyota Automobile

The objective of thesis aims to conduct a survey on Toyota Cars prefererences (Toyota 86, Yaris, Corrola, Vios, Camry, Innova, Fortuner, Hilux, Hiace, Prado and Land Cruiser) of people in Ho Chi Minh City and examine difficulties, challenges in choosing Toyota Cars for long term Usage

The thesis aims to understand buying behavior of people in HCM City by studying their decision making process and type of buying behavior

This thesis will conduct studying any influence both positive and negative that may impact on purchasing decision of Toyota Cars

Understanding relationship between main factors affecting customer Toyota Cars purchase decision is an important role for both Automotive developers and enterprises to satisfy customers‟ demand and to have available strategies in the Automotive field

Understanding relationship between main factors affecting customer purchase decision is

an important role for Toyota firms to satisfy customers‟ demand and to have available strategies in the Automotive field

1.5 SCOPE OF STUDY

The survey has been conducted within November 2015 in Ho Chi minh City Toyota Car Dealers will be involved in the survey as following:

+ An Thanh Toyota (ASTA), 606 Tran Hung Dao-Distict 5

+ Ben Thanh Toyota (TBTC), 262 Tran Hung Dao- District 1

+ Dong Saigon Toyota (TESC), 507 Xa Lo Ha Noi- An Phu Ward, District 2

+ Dong Saigon Toyota– Go Vao Branch, 18 Phan Van Tri, Go Vap District

+ Tsusho Toyota (TTSAMCO), 26 Kinh Duong Vuong, District 6

+ Ly Thuong Kiet Toyota (TLTK), 151A Ly Thuong Kiet, Tan Binh

+ Hiroshima Tan an Toyota (THTC), 220 Bis Dien Bien Phu, Binh Thanh Dicstrict + Phu My Hung Toyota (TPMH), 806 Nguyen Van Linh, District 7

+ An Suong Toyota (TAS), 382 Highway 22, District 12

The study is important in order to provide information to automotive Companies in Ho Chi Minh City especially when it comes to selling their automotive products; this automatically taps into their strategic goals

This study will also be beneficial to the consumers in that they will have more knowledge about motor vehicle products and the importance of motor vehicles, they will also learn about the different factors affecting their buying decisions

This study will also be helpful to other researches and academic institutions to learn about

Ho Chi Minh city‟s Automobile industry This study will also be the centre piece idea to other students willing to pursue a research on a similar field This is so because the final draft of the completed research will provide further areas of research

The study was conducted on consumer buying behaviour of Automobile vehciles in Ho Chi Minh City This study was based on all 9 Toyota Car Dealer for customers in Ho Chi Minh city It included a target market of people ranging from ages 19 – 60 who have disposable income to spend on Automobile vehciles, it targeted both walk in clients and existing clients

The limitations of the study was the fear of ananymity on the side of the respondents This was however eliminated by the assurance that the study was for academic purposes and that the findings was not to be shared to any other party

1.6 DEFINITION OF TERMS

1.6.1 Consumer buyer behavior

This refers to the multi-step decision-making process people engage in and the actions they take to satisfy their needs and wants in the marketplace (Kotler, 2008)

1.6.2 Economic Factors

According to Brassington (2011), economic factors include among others; the level

of income, credit availability, attitude towards spending, liquid assets

1.6.3 Socio cultural factors

Social cultural factors include a number of factors that characterize the relationships and activities of a group of people within a particular set environment (Jones, 2007)

1.8 CHAPTER OVERVIEW

This thesis consists of chapters including:

Charter 1: Introduction This chapter is to present the general introduction of

Automotive demand and overview of Vietnamese Automobile industry with customers at Toyota Car Dealer in Ho Chi Minh City particularly The problem statement and objectives of study are described in this chapter in details

Charter 2: Literature Review The conceptual framework of key factors of Toyota Car

preference pattern; car purchasing intention, decision making process are described and the previous model/research to support for proposal hypothesis and research model for this study

Charter 3: Research Methodology This chapter describes the research methodology and

to develop the process study, measurement scale, sampling plan and the method of analysis and testing hypothesis

Charter 4: Data analysis & Results This chapter presents the result of research such as

statistical analysis and discussion

Chapter 5: Conclusions & Implications This chapter presents the main findings and

managerial implications Besides, the limitations and further studies are also shown

CHAPTER 2 LITERATURE REVIEW

2.1 Introduction

In this chapter, literature is reviewed based on research objectives To start with, reviewed relevant literature relating to the economic factors affecting consumer purchasing decisions in Ho Chi Minh City‟s Automotive industry then the psychological factors affecting consumer purchasing decisions in Ho Chi Minh city‟s motor vehicle industry as well as the social-cultural factors affecting consumer purchasing decisions in Ho Chi Minh city ‟s Automotive industry and finally the demographic factors affecting consumer purchasing decisions in Ho Chi Minh City‟s Automotive industry

2.2 Economic Factors Affecting Consumer Purchasing Decisions

2.2.1 Level of Income

One essential economic factor that influences consumer buyer behavior is income This mainly because the amount of goods bought by a consumer as well as the type bought differs depending on the wage which a consumer earns In the event that a buyer has greater income, chances are very high that such a consumer will go for more luxury goods like high- end cars Taylor (2011) is of the opinion that a reduction in income shifts purchasing behavior from buying normal goods to inferior goods This simply means that as consumers buy fewer specialty items, such as shoes and clothing, and buy more store-brand items

Mogridge (2009) posits that the main essential concept when it comes to consumer buyer behavior is that the average person of a given income level is likely to spend a given quantity of money on the purchase of cars He therefore goes ahead to argue that there is a function which gives, for every income level, as well as an average expenditure on a car purchase More recent studies that have been conducted in this area have shown that there is a positive relationship between income levels and vehicle

purchase decisions by individuals (Feng, Wang & Zeng, 2011) For example, a study conducted by Nagai, Fukuda, Okada, and Hashino (2013) revealed that two- and four-wheeled vehicle ownership in Thailand depends largely on the income levels of individuals

In another similar study Diaz-Olvera, Plat & Pochet (2008) and Blumenberg & Pierce (2012) established that income or lack of it influences how a household purchases their mode of transportation as well as the way in which individuals choose to travel They therefore are of the opinion that indeed low-income households are less likely to own cars (Rahman, 2011) and more likely to travel by other modes of transportation other than motor vehicle This therefore means that the income level of an individual has a positive relation with buying decision It also means that individuals who have high income are likely to buy expensive products

Mathios (2012) on his part argues that family income level influences ones decision on the choice of a motor vehicle to purchase This indeed is a reflection of a high efficiency in collecting information on motor vehicles Such individuals are likely to posses the financial support to purchase such vehicles and this therefore influences them to buy more expensive cars whose price is higher Gould and Lin (2014) on his study established the level of income for an individual relates positively with health knowledge, especially when it comes to choosing and potentially using motor vehicles (Cotugna et al., 2012)

Some studies have shown that indeed income level plays a role in predicting consumer awareness related to a person‟s attitude contraction This is mainly because there

is a positive relationship between income growth and quality of car This is therefore a fundamental issue when it comes to consumers purchasing decision The level of income of an individual influences the willingness to pay marginally higher prices as a social responsibility towards the motor vehicle In other empirical studies carried out in jurisdictions with low income per capital do not show any improvement in the

willingness to spend more on vehicles (Bloom & Sevilla, 2014) Therefore, the income level moderates the relations between consumers behavior towards purchase decisions

of motor vehicles

Gronmo (2008) has opined that individuals who are not able to fulfill their primary needs, especially regarding self-esteem or self-actualization, are likely to compensate these desires through alternative means.This means therefore that low-income households, or those facing racial or ethnic discrimination, are more or less likely spend heavily on socially visible products so as to make up for their lack of status in society In the event that traditional indicators of social status, such as wealth or occupational prestige, are not accessible, people will without doubt resort to the consumption of status products that are easily seen as symbols of a higher class (Fontes

& Fan, 2006)

2.2.2 Interest Rates

Interest rates are among one of the most influential factors when it comes to purchasing decision for consumers This is mainly because financial contracts for consumer durables are mainly made up of multiple terms and conditions that include a price (interest rate) as well as a payment period, which therefore makes it unlikely that the financial costs of different contracts are exactly the same Dasgupta, Siddart & Silva-Risso (2009) carried out an analysis of the behaviour of consumers with regards to the choice of the funding method for automobiles (Banerjee, 2010)

They were able to compare the credit and leasing options This study revealed that consumers are very myopic and will therefore prefer contracts that come with lower payment streams, even when they have higher total costs They also established that indeed most consumers are more likely to lease than to finance cars with higher maintenance costs This is simply because these options provide consumers with the option to return the car before maintenance costs become too high Wonder et al., (2009) on the other hand opined that respondents preferred low interest rates, a high

rebate, and down payment This view is contrary to that held by Doyle (2007) who argues that an interest rate increase is likely not affect real motor vehicle sales if the automakers are able to counteract the rate increases with lower prices

2.2.3 Fuel Prices

McManus (2009) conducted a study to examine the link between fuel prices and sales

of cars and trucks in the U.S In the analysis, He was able to show that economic theory predicts a direct link between fuel prices and SUV sales, and more broadly between fuel prices and vehicle sales He therefore concluded that for an individual to make a rational choice at the time of purchase, the shopper requires a prediction (simple or sophisticated) of what future fuel prices are likely to be He further concluded that indeed a significant portion of changes in vehicle prices is likely to be explained by changes in fuel prices In effect, rising fuel prices lower the prices of automobiles This specifically, includes the negative impact of rising fuel prices on vehicle prices is greater for less fuel efficient vehicles than for more fuel efficient vehicles

2.2.4 Price of the Car

Pricing is considered to be one among the four P's of the marketing mix (Brassington, 2011) It is therefore the manual or automatic process of applying prices to purchase and sales orders, on the basis of factors such as a fixed amount, quantity break, promotion or sales campaign, specific vendor quote, price prevailing on entry, shipment or invoice date, combination of multiple orders or lines, and many others Automated systems therefore need to have more setup and maintenance but this is likely to prevent pricing errors The pricing technique used by most retailers is cost-plus pricing This involves adding a mark-up amount (or percentage) to the retailers cost This simply involves charging the amount suggested by the manufacturer and usually printed on the product by the manufacturer (Jones, 2007)

A well-chosen price needs to be able to achieve the financial goals of the company such as profitability It should also fit the realities of the marketplace while at the same time support a product's positioning and be consistent with the other variables in the marketing mix Price is largely influenced by the type of distribution channel used, the type of promotions used, and the quality of the product Price therefore needs to be relatively high if costs incurred are high, distribution will without doubt be exclusive, and the product is supported by extensive advertising and promotional campaigns In this regard therefore a low price can be a viable substitute for product quality, effective promotions, or an energetic selling effort by retailers (Jobber, 2010).

In Turkey, Alper & Mumcu (2009) carried out an estimate on the demand for new automobiles using quarterly data on price, quantity, quality, country of origin, and product characteristics of the new automobile sales market demand during the period 1996-1999 He therefore established that the demand for new automobiles is price inelastic in the short run Similarly, Zhan & Vrkljan (2013) in South-Western Ontario carried out a study on the older drivers‟ (70-90 years old) perceptions of vehicle safety and how they influence their vehicle purchase

The findings revealed that safety was superseded by other purchasing considerations - most notably, price Price was therefore identified and emphasized as the key factor that influenced vehicle purchase decisions Fuel efficiency, which participants considered in their overall cost of the vehicle, was also listed as an important consideration in the vehicle purchase decision process

East (2014) argues that in traditional economics prices are simply treated as a cost This is because the recognition that a price merely serves to inform the consumer about the good is more of recent origin Price, one of the non-product attribute of brand associations where it can be an important associations in the formation of brand

perceptions, particularly with regard to value and desirability and is a criterion by which consumer often segment their knowledge of a market or category (Batey, 2009) High quality products, as well as fancy packaging, exclusive store locations, high retail margins, expensive promotions, advertising campaigns, notwithstanding brand names are all seen to be the contribution to the higher prices of luxury goods Companies therefore go ahead to make large investments into these components in order to make their products instantly recognizable and familiar The luxury products are also likely

2.3 Psychological Factors Affecting Consumer Purchasing Decisions

2.3.1 Perception

Perception is regarded to be the energy that simply makes us aware of the world around

us and also goes ahead to attach a meaning to it after a sensing process Human beings

in particular are able to view their surroundings differently This is because different people have the different ideas about a specific event It means therefore that no one can see or feel the 100% of all things Ever wonder why people buy certain products?

It is all about perception Perception is considered to be how consumers understand the world around them on the basis of the information they receive through their senses In response to stimuli, consumers are likely to subconsciously evaluate their needs, values and expectations, and then they use that evaluation to select, organize and interpret the stimuli (Connolly, 2010)

The marketplace‟s perception of a brand or industry is considered to be very essential which is why big brands work so hard to ensure that the general perception surrounding them and their industry is as positive as possible As a result, companies like Gillette, will pay David Beckham to „model‟ their products By aligning the way people feel about Beckham, with the Gillette brand, Gillette can improve the perception of their brand or reinforce what‟s already positive about it (Taylor, 2006)

A study carried out by Hawkins & Mothersbaugh (2010) was able to show that perception begins with consumers‟ exposure and attention to marketing stimuli and thereafter ends with their interpretation of the stimuli Etzel, Walker & Stanton (2014),

on their side believe that consumers‟ perception is not only determined by the characteristics of the stimuli, but it is also determined by the characteristics of the consumer him or herself It is therefore important for that marketers obtain a thorough understanding of their target markets as well as how consumers will perceive various marketing-related stimuli

For example, Etzel et al., (2007) argues that the four elements of the marketing mix, namely product, place, distribution and promotion, are likely to influence consumers‟ perceptions of the business, and therefore their selection Manning & Reece (2007) also opines that customers are likely to perceive the product‟s value on the basis of its benefits which, in turn, is greatly influenced by the product‟s performance, features, quality, warranties, packaging as well as labelling

2.3.1.1 Perceived Quality

In Ho Chi Minh City markets, customers look for product quality and features that will satisfy their needs For example a vehicle is no longer seen to be just a means of transport but has to emphasis on safety, durability, among other features like space, seating capacity, 4WD or engine power and reliability among other features The massive literature has emphasized on actual quality and this has gone further to conspire against what we describe as the neglected frontier of quality: an outside-in perspective driven through the customer-centric perception of quality by intrinsically dealing with the voice of the customer The perception of the consumer regarding quality of products has its own distinct definition and form of measurement It therefore goes a long way to touch on subjectivity, and is the level of perceived value reported by the customer who benefits from a process or its outcome (Cronin &

Taylor, 2012)

Perceived quality is in the mind of the believer, and is a poor offspring because our methods of today are all focusing attention on the business and not to the customer outside of the business Perceived product quality is therefore considered to be one of the most important constructs in marketing In recent years, for example perceived quality has been seen to be the subject of considerable interest by both practitioners and researchers, mainly in services marketing (Cronin & Taylor, 2012) However, work that integrates the role of perceived product quality within the context of other marketing variables like product involvement, consumer satisfaction and purchase intentions has received less attention

Indeed, the belief that high perceived quality leads to repeated purchases is the bedrock

of any business It means therefore that it is important to achieve perceptions of quality however this requires the quality claim to have substance It also means that it

is important to generate an understanding of what quality means to customer segments,

as well as a supportive culture and a quality improvement process that will enable the organization to deliver quality products and service (Gronmo, 2013)

Additionally the creation of a quality product or service is only a partial victory; perceptions must be created as well Perceived quality may differ from actual quality for a variety of reasons First, consumers may be overly influenced by a previous image of poor quality Because of this, they may not believe new claims, or they may not be willing to take the time to verify them Thus it is critical to protect a brand from gaining a reputation for shoddy quality from which recovery is difficult and sometimes impossible (Parasuraman, Zeithaml & Berry, 2009)

Second, a firm may be achieving quality on a dimension that consumers do not consider important For example when Citibank dramatically increased back-office efficiency by automating its processing activities, the expected impact on customer

evaluations was disappointing Customers, it turned out, either did not notice the changes or did not recognize any benefit from them There is a need to make sure that investments in quality occur in areas that will resonate with customers (Parasuraman et al., 2009)

Third, consumers will in very few circumstances have all the information required to make a rational and objective judgment on quality and even if they do have such information, they may not be having the time and motivation to process it In the end such consumers rely on one or two cues that they associate with quality; the key to influencing perceived quality is the mere understanding and managing these cues properly Thus, it is important to understand the little things that consumers use as the basis for making a judgment of quality (Parasuraman et al., 2009)

Similar to brand awareness, perceived quality is determined by a number of factors To

be more specific, perceived quality can further be classified into product quality and service quality Regarding product quality, there are seven dimensions which affect the consumers‟perception, namely performance, features, conformance with specifications, reliability, durability, and serviceability as well as fit and finish Service quality, on the other hand, is judged by its corresponding tangibles, reliability, competence, responsiveness and empathy (Aaker, 1991) As mentioned by Srikatanyoo & Gnoth (2012), consumers are inclined to develop stereotypical beliefs about the products from particular countries Hence, consumers could have their preferences for products made from one country over another (Papadopoulos et al., 2011)

2.3.2 Learning

Learning is mainly associated with changes in an individual‟s behavior that come about from experience In every circumstance an individual‟s perception is conditioned by his or her prior experience, for it is this which constitutes our preparatory set or expectations and the framework into which we seek to place and organize new stimuli

In other words, we have learned from our earlier experience and seek to maintain balance or consistency by relating to and interpreting new stimuli in terms of past or learned stimuli (Blythe, 2008)

The most important part about this is that marketers can build demand for a product by associating it with strong drives, using motivating cues, and to the same drives

as competitors and providing similar cues because buyers are more likely to transfer loyalty to similar brands then to dissimilar ones (Lamb, 2010)

Learning can take two forms:Experiential Learning and Conceptual learning Experiential learning occurs when an experience changes your behavior Conceptual learning on the other hand is not acquired through direct experience

2.3.3 Related Utilities

Enjoys related utilities are considered to be having a relationship with practical and effective sides and are therefore not based on objective sides of products (Samuel, 2014) Usually consumers are seen to achieve enjoys related utilities that include entertainment, exploration, as well as self-expression Buying enjoys on the other hand are made up of consumer‟s personality traits that they strive to enjoyable buying and experience more buying enjoys Entertainment enjoys are important for peoples who enjoy from buying, and they achieve buying related extra advantage with lower price Therefore these efforts lead to increasing people‟s utilities

On the other hand exploration utility is related to characteristics such as innovation, Variety seeking, and impulsiveness (Ailawadi et al., 2011) Innovative consumers may have desirable tendency to products drives, so these efforts could motivate them

to achieving novel products

Ailawadi et al., (2011) believes that there are impacts of information exploring

in consumer‟s reaction to price discounts could characterize as perceived explored profits It means that such consumers are exploring resources when products buying help consumers to satisfy their main needs about diversity information or innovation.

2.4 Social-Cultural Factors Affecting Consumer Purchasing Decisions

Consumer decisions are likely to be influenced by a number of socio-cultural factors This section presents a detailed literature review of how these factors come into play in light of the consumer buying decisions

Hofstede (1980) demonstrates that there are national and regional cultural groupings that affect the behavior of organizations Hofstede looked for national differences between over 100,000 of IBM's employees in different parts of the world, in an attempt

to find aspects of culture that might influence business behavior

Hofstede identified five dimensions of culture in his study of national influences: Power distance; the degree to which a society expects there to be differences in the levels of power A high score suggests that there is an expectation that some individuals wield larger amounts of power than others A low score reflects the view that all people should have equal rights (Hofstede, 1980)

Uncertainty avoidance: reflects the extent to which a society accepts uncertainty and risk Individualism vs collectivism; individualism is contrasted with collectivism, and refers to the extent to which people are expected to stand up for themselves, or alternatively act predominantly as a member of the group or organization However, recent researches have shown that high individualism may not necessarily mean low collectivism, and vice versa Research indicates that the two concepts are actually unrelated Some people and cultures might have both high individualism and high collectivism, for example Someone who highly values duty to his or her group does not necessarily give a low priority to personal freedom and self-sufficiency (Hofstede, 1980)

Masculinity vs Femininity; refers to the value placed on traditionally male or female values (Hofstede, 1980) Male values for example include competitiveness, assertiveness, ambition, and the accumulation of wealth and material possessions This area will look at the external factors that contribute to an organizations‟ corporate culture This can be influenced by the industry, competition among other (Hofstede, 1980)

Culture is part of the external influences that impact the consumer That is, culture represents influences that are imposed on the consumer by other individuals The definition of culture offered in one textbook is “That complex whole which includes knowledge, belief, art, morals, custom, and any other capabilities and habits acquired by man person as a member of society (Kileba, 2011) Culture is the complex

of values, ideas, attitudes and other meaningful symbols that allows human to communicate, interpret and evaluate as members of society (Blackwell et al., 2011)

It is the primary reason behind a person‟s wants and behavior Although, different societal groups have their own culture that affects consumers buying behavior, the extent to which it influences the behavior might vary from country to country Each cultural group can be divided into groups consisting of people with common life experiences and situations, also known as subcultures (Kotler et al., 2005) such as nationality, racial groups, religion, and geographical areas The third cultural factor is social class, which is constituted of other variables: occupation, income, education, and wealth (Blackwell et al., 2011)

The culture varies with region and religion Every culture has smaller groups with shared values and beliefs due to common life experience and situations These groups are very important to marketers since many of these subcultures make up important market segment (Kotler et al., 2011)

Brands are also considered to be symbols used to convey meanings to consumers, some

brands for instance Mercedes Benz convey meanings of prestige and quality On the contrary, there are also brands that convey meanings relating to low price such as Virgin Airlines It means therefore that brands help consumers to minimize and provide

a sense of familiarity, which further reduces the purchasing risk involved (Lehmenn & Winer, 2007) an aspect that appeals to consumers who poses high uncertainty avoidance

2.4.1 Religion

Regarding religion, Clement & Nyovani (2014) study revealed that religion was associated with choice of consumer products Religion will be considered in the current study as a variable The aim is to examine how different religious background affects the choice of motor vehicles

In the study by Clements & Nyovani (2014), various factors including religion, educational level, age and residential areas had significant effects on the consumer choice of products and services In the current study, these variables were considered among other demographic, socio-economic and facility factors to examine their effect on the choice of motor vehicles Unlike Clements & Nyovani (2014), who based their analysis on secondary data, the current study will use primary data Similarly, as a departure from Clements & Nyovani (2014), a theoretical model will be developed in the current study

2.4.2 Family

The results showed that family has a positive relationship with the consumer choice of certain products and service The results of the study also showed that individuals are more likely to purchase goods and services based on how they have been brought up This means that their family backgrounds have dictated their purchase decisions (Rashid, Sambasivan & Johari, 2013)

A research by Denison (2009) revealed that the strength of the culture was predictive

of short-term individual purchase decisions Gordon & DiTomaso (1992) in a

follow-up study found sfollow-upporting evidence that a strong family tie was predictive of an individual‟s purchase behaviour In an attempt to replicate Denison‟s (2009) study, they also defined cultural strength using the inverse of standard deviations across the scales in their instrument They found that a strong family tie, regardless of content in which a substantive value was placed on adaptability, was associated with consumer choice, at least in the preceding three years More importantly, they found that adaptability to changes in purchase decisions was also predictive of family links

2.5 Demographic Factors Affecting Consumer Purchasing Decisions

Apart from external situational contexts that affect consumer choices, there are a number of essential internal factors, which are recognized as influential to buying behavior Among these internal factors are consumers‟ demographic characteristics that include age, gender, marital status, occupation, education as well as income Demography can be described as the vital and measurable statistics of a population, demographics helps to locate target market, they are easier to measure and are suitable for psychographic and socio-cultural studies

Demographic variables go a long way to reveal ongoing trends that include a shift in age, gender and income distribution that signal business opportunities The demographic factors are seen to have a huge impact when it comes to the assessment of different features which are generally associated with clothes Consumers who belong

to a higher social class are likely to prefer a certain type of vehicles which they would feel would cater their needs Similarly the purchasing decisions of such consumers would also be depending on the age group The features younger consumers are most likely to look for in cars may not be the same with older consumers Other demographic variables include income, education and occupation

2.5.1 Gender Differences

According to nature: the past, present, and paradisal future of consumer gender identity

by (Kacen, 2010), consumption has always been gendered Most of the available products in the market these days do have a specific gender type, some are made with masculine features while some are made with feminine features Products‟ gender are therefore created and sustained by marketers for example; princess phones, Barbie dolls

Research suggests that shopping is a more exciting activity for women with respect to men Female consumers feel more independent when they do shopping in accordance with men Another point that men and women present differentiation is women consider shopping is a social need whereas male consumers pay importance to main function of a product instead of secondary function Gender has an important role in consumer behavior, this for the reason that there are differences between men and women about expectation, want, need, life-style etc reflect to their consumption behaviour (Akturan, 2009)

the problem recognition and information search stage for “traditional” female products that include home furnishing, appliances, cereals among others On the other hand men were seen to be more dominant in the information search stage for male dominated products like automobiles, television sets, razors, among other Gender has therefore been identified as a factor that largely influence information search as well as other meaningful consumer behavior constructs (Putrevu, 2011)

Men are also known to have a tendency of going to the most salient cue while women

in most cases tend to comprehend all information available (Ailawadi et al., 2011) Additionally women are seen to more subjective, intuitive, comprehensive, as well as relational processing while men on the other hand are viewed as being more logical, analytical, selective as well as item-specific processing

It means therefore that males‟ selectivity and item-specificity predict that they may search less comprehensively than females and focus on certain information sources and topics When it comes to decision making women use other people‟s opinions to help make their own decision while men use other people‟s decisions to help them form their own opinion

2.5.2 Age Differences

Age differences are considered key to purchasing decisions Many marketers have today curved themselves a niche in the market place by concentrating on some specific group base on demographic variables Marital status has traditionally been the focus of most marketing For majority of products and services, age differences continues

to be the relevant consuming unit, marketers are interested in the number of and kinds of household that own and/or buy certain products, more so, marketers have discovered the benefits of targeting specific marital status groupings

Studies have shown that for the elderly, then, habits are more likely to be activated and relied on (Ailawadi et al., 2011) This therefore means that age can be proxy for the amount of associate reinforcement Indeed, research indicates that age is associated with reductions in the individual tendency to generate uncommon free associates and increases in the tendency to repeat a behavior (Drolet et al., 2007) Aging goes a long way to bring about certain cognitive deficits that can be related to the increased development of and reliance on more automatic, habit-driven behavior Although cognitive and behavioral performances tend to slow with age, field studies show that the real-world performance of elderly adults is usually on par with that of young adults

The development of habits goes a long way to equalize performance Ironically, then, older are likely to be wiser despite the fact that older adults expend fewer cognitive resources because they can rely on habits Age is a variable that captures many

socioeconomic and individual difference characteristics Interestingly, despite an average age difference of nearly 50 years, research shows that elderly and young adults generally agree as to what habits are “good” versus “bad” (Drolet & Suppes, 2009)

However, it can be argued that there are differences between age groups in terms of the kinds of habit behaviors reported For example, compared to young adults, the elderly emphasize habits related to interpersonal relationships, such as friend behaviors like giving and helping This shift in the kind of habits elderly versus young adults report is seen to be very much consistent with the qualitative shift in how older versus younger adults process information and make decisions Specifically, the elderly tend to focus more on personal experiences and emotion This qualitative shift appears adaptive for elderly adults

2.5.3 Changing Life Events

Changing life events are very instrumental to consumer purchasing decisions This is mainly because such coping mechanisms and their relationships with goods and services exhibit an increased propensity for coping mechanisms to change consumer behaviour The increased propensity to purchase implies a relationship between coping mechanisms and the need for a product or service

Further it also means that exploration in the marketing discipline regarding this relationship is required because coping mechanisms present a trigger, or aroused need, for altered purchasing behaviour In this regard therefore the mere understanding how the process is triggered and the resultant changes in decision making variables would benefit marketing research in terms of effectiveness and efficiency of sales and communications mechanisms

It also means that life events change consumer behaviour (Mathur, et al., 2012) and that many coping mechanisms exhibit similarities with consumer decision-making, it can be assumed that individuals experiencing life events can undertake a decision-making process Nevertheless, how the life event affects the decision-making process is still a topic under research by a number of scholars and forms the central point of this research Before life events and decision-making are discussed in more depth another stream of research, role transition must be discussed Role transition has also been found to influence changes in consumer behaviour It requires consideration to gain a complete picture of the main area of interest; life events and changes in consumer behaviour

2.6 Purchase decision

Customer behavior is an important research topic for recent decades “There is also a clear shift from rational factors to psychological factors and to social decision factors” (Bargh, 2002) Beside, there is a link between the “intention to purchase” to “decision

to purchase” of customers, especially the decision related to purchase real estate (Ajzen, 1991, p 179; Han & Kim, 2010, p 659; Kunshapn & Yiman, 2011, p.7579)

2.7 CONCEPTUAL FRAMEWORK

A conceptual framework which is proposed to show the relationship between four independent variables consisting of “Economic factor” , “Psychological factor”,

“Social-Cultural Factors”, “Demographic Factor” and one dependent variable, namely

“Toyota Car purchase decision” It also shows the effecting of demography including

“gender”,“age”, “marital status”, “income” and “education” as control variables

on the dependent variable The conceptual framework is shown as the model (see Figure 2.7)

Figure 2.7: Research Model

2.8 Chapter Summary

This chapter summarizes the literature review in relation to the objectives raised above The first section provided literature on how economic factors influence consumer decisions The second section explores how psychological factors influence consumer decisions The third section explored how socio-cultural factors influence consumer decision and the final subsection looked at how demographic factors affected consumer buying decision The next chapter will look at the research methodology

Demographic

Factors

Social-Cultural

Factors

3.2 Research Design

The study made use of the descriptive research design with the view of getting access

to the data to be analysed Burns and Bush (2010) describes a descriptive research design to be one where methods as well as procedures are used to describing variables Cooper and Schindler (2001) on the other hand argues that a descriptive study basically investigates these variables by answering who, what, where, when and how questions

Sloman (2010) further defines a descriptive analysis as one which involves direct observation of behaviour in a natural environment and therefore it normally provides a means to gather baseline rates of the problem behaviour The dependent variable of the study was consumer choice, while the independent variables were the economic factors, physiological factors and the socio-cultural factors

3.3 Population and Sampling Design

3.3.1 Population

Population is described as that total collection of elements on which a researcher seeks

to make inferences while conducting the study (Saunders, Lewis and Thornhill, 2009).The target population in the study was 100 Toyota customers in Ho Chi Minh city It was however not possible to meet all the customers at one place It meant therefore that the researcher needed to strategically position himself at a point where he could be able to interview them

3.3.2 Sampling Design

3.3.2.1 Sampling Frame

Sampling frame can be defined to be the list of elements where the researcher can actually pick the actual sample (Cooper & Schindler, 2000) The sample frame is also known as the working population The sampling frame in this study included a list of all Toyota customers in Ho Chi Minh city

3.3.2.2 Sampling Technique

The technique that was selected for this study was simple random sampling technique This methodology was considered to be very good for the study This is because it gives all the members of a population an equal chance of being selected to participate

in the study Saunders, Lewis and Thornhill (2003) argues that this technique involves one selecting the sample at random from the sampling frame Simple random sampling was mainly focused on the concept of random selection-a controlled procedure that assures that each population element is given a known nonzero chance of selection

3.3.2.3 Sample Size

Churchill (2003), states that a sample size needs to be adequately and accurately selected

so as to make sure that the sample is indeed a representative of the whole population under study in order to provide reliable and accurate information needed The sample size

is a representation of the whole population from which the researcher can indeed make inferences on the whole population by use of the sample The sample was therefore selected in a way that increases reliability and validity In order to obtain the sample size the following statistical formula borrowed from Saunders et al (2003) was used

In order to cater for problems of response rate, 100 respondents were targeted The researcher is of the opinion that this size is accommodative enough to give views that could be generalized to the whole population given that Toyota is known to have a large customer base

3.3.2.4 Measurement scale

In order to operate concepts, it was necessary to measure them in some manners, so different variables were required to choose an appropriate scale The independent variables were applied interval scale with five - point of Liker scale consisting of totally strongly disagree (1), disagree (2), neutral (3), agree (4) and strongly agree (5)

3.4 Data Collection Methods

In order to acquire accurate information the study relied mainly on primary sources of data This type of data was collected using questionnaires which were formulated

(2008) a questionnaire is considered to be the best tool for collecting data in a descriptive design and when accessibility to the respondents is challenging The questionnaire was divided in three main sections, the first section was made up of questions seeking background information of the respondents The second part of the questionnaire had questions with regards to the four research objectives The questionnaire had both open