Factors influencing consumer purchase intention a study private labels in ho chi minh city

UNIVERSITY OF ECONOMICS HO CHI MINH CITY International School of Business NGUYEN THI KIEU CHI FACTORS INFLUENCING CONSUMER PURCHASE INTENTION: A STUDY PRIVATE LABEL IN HO CHI MINH CITY MASTER OF BUSINESS (Honours) SUPERVISOR: Dr.VO THI NGOC THUY Ho Chi Minh City – Year 2015 TABLE OF CONTENTS Table of Contents ABSTRACT Chapter 1: INTRODUCTION 1.1 Research background .2 1.2 Management problem .3 1.3 Research problem 1.4 Research objectives 1.5 Significance/value/implications 1.6 Research scope 1.7 Research structure Chapter 2: LITERATURE REVIEW, HYPOTHESES AND RESEARCH MODEL 2.1 Introduction 2.2 Literature review 2.2.1 The concept of brand .7 2.2.2 The concept of private label 2.2.3 The differences between private labels and national brands 10 2.2.4 The concept of consumer purchase intention 12 2.3 Hypotheses development 13 2.3.1 Summary of existing research related to private label context 13 2.3.2 Perceived quality and consumer purchase intention 16 2.3.3 Perceived risk, perceived quality and consumer purchase intention 18 2.3.4 Familiarity, perceived quality and consumer purchase intention 22 2.3.5 Store image, perceived quality and consumer purchase intention 24 2.4 Research model 27 2.5 Conclusion .28 iii | P a g e Chapter 3: RESEARCH METHODOLOGY .29 3.1 Introduction 29 3.2 Research procedure 29 3.3 Research design .29 3.4 Data collection method 30 3.4.1 Primary data 30 3.4.2 Secondary data 32 3.5 Product selection 32 3.6 Measurement scales .32 3.7 Sample size 35 3.8 Sampling 35 3.9 Data Analysis 36 3.10 Conclusion 36 Chapter 4: DATA ANALYSIS AND RESULTS 37 4.1 Introduction 37 4.2 Data statistical analysis 37 4.3 Measurement scales test and modifying 39 4.4 Confirmatory Factor Analysis (CFA) result 40 4.4.1 Model fit indices .40 4.4.2 Saturated model 41 4.5 Research model test 44 4.5.1 Theoretical model without moderating effect test by SEM 45 4.5.2 Theoretical model with moderating effect test by SEM 47 4.5.3 Theoretical model test by Bootstrap 50 4.5.4 Hypotheses testing 51 4.6 Conclusion .53 iv | P a g e Chapter 5: CONCLUSION 54 5.1 Introduction 54 5.2 Research results: 55 5.2.1 The results of measurement scale 55 5.2.2 The results of theoretical model 55 5.3 Managerial implications 59 5.4 Limitations and directions for further research .61 REFERENCES .63 APPENDICES 72 Appendix A: Interview Question 72 Appendix B: Questionnaire 73 Appendix C: Bảng Câu Hỏi Khảo Sát 76 Appendix D: Cronbach's Alpha Testing 79 Appendix E: Exploratory Factor Analysis 80 Appendix F: Standardized Regression Weights 81 Appendix G: The SEM Result of Research Model With Moderating Effect 82 v|Page LIST OF FIGURE Figure 2.1 : The research model of private label proneness 16 Figure 2.2: The research model 28 Figure 3.1: Research procedure 31 Figure 4.1: Saturated model (Standardized estimates) 41 Figure 4.2: The SEM result of theoretical model without moderating effect (Standardized) 46 Figure 4.3: The SEM results of research model with moderating effect (Standardized) 48 vi | P a g e LIST OF TABLE Table 3.1: Measurement scale and sources 33 Table 4.1: Descriptive of statistics 38 Table 4.2 Cronbach’s Alpha, Composite reliability and AVE results 42 Table 4.3: The correlation of research variables 43 Table 4.4: Standardized estimates and p-value of hypothesized model 47 Table 4.5: The findings of regression weights in SEM model (Standardized) 49 Table:4.6 The results of indirect effects by bootstrap estimate (standardized) 50 Table 4.7: The results of BOOTSTRAP estimate 51 Table 4.8 : The results of hypotheses testing 53 vii | P a g e ABSTRACT The appearance of private labels brings plenty of benefits for retailers and consumers during the past period Although this trend is much appreciated and successful in Western countries, Asian buyers are not motivated to purchase private label due to the uncertain feeling Based on previous studies and findings, this research intends to investigate how several predictors including financial risk, performance risk, physical risk, store image, familiarity affect on perceived quality and consumer purchase intention towards private labels Besides, the mediating and moderating effects are also evaluated with the purpose of accessing deeply knowledge about this brand extension strategy The research model is designed to test in HCMC retailing market with sample size being 380 participants and collected data is analyzed by SEM method The results reveal that excepting financial risk, the other factors have significant meaning in explaining the variance of dependent variables Specifically, performance risk, physical risk and store image influence remarkably on perceived quality and on purchase intention indirectly whereas only direct effect of familiarity on purchase intention is fully proved More interestingly, the moderating role of store image, which modifies the relationship between performance risk, physical risk and perceived quality, is strongly determined Hence, store image is considered as a symbol of quality and risk reducer The research finding provides useful reference for retailers and marketers to give effective strategies associated with private labels Among them, quality guaranty and maintaining store reputation and image must receive more attention The current study also contains some limitations involving sample size, lack of diversity on product category as well as measurement scale of store image, which need to evaluate carefully Thus, it is approval to fulfill these drawbacks by further research Keywords: Private labels, perceived risk, perceived quality, familiarity, store image, and purchase intention 1|Page Chapter INTRODUCTION 1.1 Research background The harsh competition among business sector motivates company to apply their brand strategies in order to survive and pursue clients One of the efficient actions these firms employ is the emergence of brand extension By this, it is likely to develop their brand image in the shoppers’ minds and achieve the customers’ loyalty as well With regard to retailing sector, nowadays more and more products with diverse categories and brand names have been come into the supermarkets that create a dynamic competitive environment From that, not only manufacturers but also retailers have to set up novel mission stressing the important ability to gain long-term profit and differentiating their products from others rivals More seriously, the pressure of unfavorable economic condition and the rapid increasing of living cost, most of consumers gradually change their shopping habits and become more sensitive with the price these days This is to say, while the shoppers try to spend less as little as possible, they also indicate to seek higher quality from the products To deal with these difficulties, globally retailers start to produce products branded their own name and sold in their stores, which are perceived as private labels Actually, offering private labels is considered as a smart strategy because of not only rising margin for themselves but also attracting customers and gaining their customers' loyalty in an aggressive competition The more private label products are offered, the more customers have choices to evaluate and purchase with the same quality but at lower price compared to national brand Hence, this leads to a new severe battle between retailers and producers In addition, according to a survey of AC Nielsen, 68% of 21,100 respondents in 38 markets from Europe, North American, Asia-Pacific to South Africa agree that supermarket own brands are good alternatives to other brands (2005) Globally, private label penetration has developed remarkably in Western Europe and North America The US market has a value share 2|Page of 79.1 billion dollars in 2012 and it is lower than that in Western Europe at 13% Nevertheless, the vast US consumers evaluate the quality of private labels as well as national brand whereas they are perceived negatively in Asia Pacific, the Middle East and Africa (Euromonitor International, 2013) 1.2 Management problem The penetration of private label is appreciated and developed in most of the Western countries and regions, however, Asian-Pacific consumers are still resisting in buying private labels in spites of the promotional efforts (Sheau- Fen et al., 2012) The report of AC Nielsen in 2005 shows that market share of private label in this area is only 4% Compared to some nations, New Zealand and Australia are the two countries which have the highest rates of private label market share whereas this number in others countries such as Thailand, Malaysia or Vietnam is not significant Turning to Vietnam, even though the market size is quite smaller than other countries in the same region, Vietnamese retailing market is still expected to have vast growth owing to the large population, the majority of young generation in population structure, high economic growth and the continuous improvement on residents’ living standard It is evaluated as an attractive destination of multinational retailing corporations With regard to Ho Chi Minh Citythe biggest economic and commercial center, it has diverse distribution channels from traditional markets, supermarkets to convenience stores that offer a variety of good categories, quality and price This distribution system not only provides better approach to attract and serve customers, but also becomes one of competitive advantages of each retailer Compared to other distribution types, supermarkets account 30% in the first quarter of 2014 (Savills, 2014) In addition, consumers gradually change their habits into choosing supermarkets or hypermarkets instead of traditional markets due to comfortable shopping environment and the portfolios of products or brand names From that, establishment and development of this modern distribution channel in Vietnamese market is speculated in full yield 3|Page Recognizing this potential, both international and domestic investors set up a range of supermarkets in many cities in Vietnam Considered as one of their empirical expansion strategies, thus, recently they start to complement private label proneness After the entry of Metro Cash and Carry, private labels are introduced by other big supermarkets namely Co.opMart, Big C and Vinatex Mart These product categories often focus on fresh and processed foods, household products and garments and receive heavy promotion such as price and display Moreover, private label products are the corporation of supermarkets and small local manufacturers or farms, thus it help them solve output issue due to weak competitive abilities with other strong brand names A survey including 305 participants of Vinaresearch in HCMC and Hanoi shows that 81% of informants who have known and used to purchase private label products of supermarkets because of attractive prices (2012) A paradox occurs that although Vietnam has the highest promotion sensitivity in Asia at 87% and consumers gradually change their perception of purchase more Vietnamese goods, the consumption of private labels is still not high as other countries such as Thailand, Malaysia and Indonesia (Nielsen, 2011) This is because consumers are lack of awareness of private labels as well as afraid of risk 1.3 Research problem With the potential growth of retailing market and the advantages of private label penetration, the question raised by retailers and marketers is what reasons or key factors would customers consider when they intend to buy private label products In addition, though a numerous studies especially brand strategy, market performance or buyer behavior have drawn both marketing academics and managerial implications (Baltas, 2003; Dursun et al., 2001), official studies about consumers purchase intention towards private labels in Vietnamese context remain limited Following prior studies conducted in many nations and some initial investigations explored consumer attitude in Vietnamese market, the current study tries to fulfill these gaps by measuring the relationships between several variables namely perceived 4|Page Meza, S., & Sudhir, K (2010) Do Private Labels Increase Retailer Bargaining Power? 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Among factors mentioned above, which you think as the most important? Why? 72 | P a g e Appendix B QUESTIONNAIRE Part I: Personal information Please, provide some your own information as below (Tick the box that matches your choice) A Screening questions: Your recent shopping in supermarkets:  Below or about months  Above months (Finish the survey Thanks for your co-operation) Have you ever known food products of private labels?  No I never heard of these products before (Finish the survey Thanks for your co-operation)  Yes I know it well and I used to buy them (Finish the survey Thanks for your co-operation)  Yes I know it but I have not bought them yet (Please, continue to answer the following questions!) B The information of respondents Your gender:  Male  Female Your age:  23- 35 years old  36- 45 years old  Over 45 years old Your monthly income:  Below millions  5- 10 millions  11- 15 millions  Over 15 millions How often you go to supermarkets:  4- times per week  2-3 times per week  One a week  2-3 times per month 73 | P a g e Which private label product(s) you have ever known?  Cooking oil  Yogurt  Cool meat  Others Part II: Factors influencing consumer purchase intention towards private labels: (1- Totally Disagree, 2- Disagree, 3- Neutral, 4- Agree, 5- Totally Agree) Please, circle the level of your agreement about the following statements No Statement Level of agreement Financial Risk I think buying private labels (PLs) would be a bad way to spend my money I concern that I would not get my money’s worth from buying PLs I think it is not a wise way of spending money 5 5 5 5 I am concerned about some potential physical harm associated with PLs Familiarity 14 I am familiar with PLs but never purchased them before 15 I can recognize PLs well 16 I had heard of PLs before 17 I know available PLs well Performance Risk I am not sure that PLs will really perform as well as it is supposed I am uncertain that PLs will provide real value as much as I expect I am concern that PLs are not going to give me a good result Physical Risk I am afraid that PLs may not be safe for my family and me 11 12 I am afraid that PLs may damage my health 13 74 | P a g e Store Image 18 The store provides a wide range of products 19 The products displayed in this store have good quality 20 The products of this store are good value for money 21 The store carry high quality merchandise 5 24 Quality is the prior criteria I consider before I decide to buy store brand food products Store brand food products are provided their ingredients’ information clearly PLs taste good 25 PLs are reliable such as their original 5 Perceived Quality 22 23 PLs seem to be good in quality 26 Purchase Intention 27 I will purchase PLs 28 I will consider buying PLs 29 The probability that I would consider buying PLs THANKS FOR YOUR ANSWER!!! 75 | P a g e Appendix C BẢNG CÂU HỎI KHẢO SÁT Phần I: Thông tin cá nhân người tham gia khảo sát Hãy đánh dấu () vào thông tin phù hợp với Anh/Chị A Câu hỏi gạn lọc: Thời gian Anh/Chị siêu thị gần nhất:  Dưới tháng (Anh/Chị vui lòng tiếp tục câu hỏi số 6)  Trên tháng (Phần khảo sát kết thúc Xin chân thành cảm ơn Anh/Chị tham gia) Anh/Chị có biết đến mặt hàng thực phẩm mang nhãn hàng riêng ? Không Tôi chưa biết sản phẩm (Phần khảo sát kết thúc Xin chân thành cảm ơn)  Có Tôi biết mua sản phẩm (Phần khảo sát kết thúc Xin chân thành cảm ơn)  Có Tôi biết sản phẩm chưa mua (Anh/Chị vui lòng tiếp tục trả lời câu hỏi bên dưới) B Thông tin người tham gia khảo sát Giới tính:  Nam  Nữ Độ tuổi:  Từ 23- 35 tuổi  Từ 36- 45 tuổi  Trên 45 tuổi Thu nhập hàng tháng:  Dưới triệu đồng  Từ 5- 10 triệu đồng  Từ 11- 15 triệu đồng  Trên 15 triệu đồng Mức độ thường xuyên siêu thị Anh/Chị:  4- lần tuần  2-3 lần tuần  lần tuần  2-3 lần tháng Anh/Chị biết qua sản phẩm nhãn hàng riêng đây? (Anh/Chị chọn nhiều sản phẩm)  Dầu ăn 76 | P a g e  Yogurt  Thịt nguội  Sản phẩm khác Phần II: Những nhân tố ảnh hưởng đến dự định mua hàng người tiêu dùng nhãn hàng riêng siêu thị (1- Rất không đồng ý, 2- Không đồng, 3- Không ý kiếnl, 4- Đồng ý, 5- Rất đồng ý) Stt Mức độ đồng ý Câu hỏi Rủi ro tài Tôi nghĩ việc mua thực phẩm mang nhãn hàng riêng (NHR) thật lãng phí tiền bạc Tôi cho thật không đáng tiền mua thực phẩm mang NHR Tôi nghĩ việc mua NHR cách tiêu tiền không thông minh 5 5 5 5 5 Rủi ro hiệu Tôi không sản phẩm mang lại hiệu giới thiệu Tôi không sản phẩm mang lại giá trị mong đợi Tôi lo ngại sản phẩm không mạng lại cho hiệu tốt Rủi ro sức khỏe Sản phẩm không đảm bảo an toàn cho gia đình Sản phẩm có thể ảnh hưởng đến sức khỏe Tôi lo ngại sản phẩm chứa đựng nguy ảnh hưởng đến sức khỏe sau Sự thân thuộc 10 11 Tôi quen thuộc với sản phẩm mang NHR phổ biến thị trường chưa mua Tôi nhận sản phẩm NHR với thương hiệu khác 12 Tôi nghe nhiều thông tin sản phẩm mang NHR 13 Tôi biết rõ sản phẩm NHR thị trường 77 | P a g e Hình ảnh siêu thị 14 Những siêu thị thường bày bán nhiều chủng loại hàng hóa 15 Những sản phẩm sản phẩm có chất lượng 5 5 16 17 Những sản phẩm thường có chất lượng tương xứng với giá Những siêu thị thường bày bán sản phẩm thương hiệu có uy tín chất lượng Chất lượng cảm nhận 18 19 Chât lượng tiêu chí cân nhắc trước định mua NHR Những thông tin thành phần sản xuất thường ghi rõ thực phẩm mang NHR 20 Tôi nghĩ mùi vị chúng hấp dẫn 21 Sản phẩm tin tưởng được, ví dụ nguồn gốc xuất xứ 22 Nhìn chung, nghĩ sản phẩm có chất lượng Dự định mua hàng 23 Tôi mua sản phẩm mang NHR 24 Tôi xem xét việc mua sản phẩm mang NHR 25 Có khả mua sản phẩm NHR tương lai XIN CHÂN THÀNH CẢM ƠN!!! 78 | P a g e Appendix D CRONBACH’S ALPHA TESTING Items FR1 FR2 FR3 Scale Mean if FinancialItem Risk Deleted 5.97 5.86 5.91 Performance Risk PR1 PR2 PR3 Scale Variance if Corrected ItemCronbach’s Alpha: Item Deleted Total0.840 Correlation 3.210 714 3.107 717 3.068 684 Cronbach’s Alpha: 0.829 Cronbach’s Alpha if item deleted 770 766 799 4.81 4.75 4.65 2.587 668 2.437 735 2.370 661 Cronbach’s Alpha: 0.829 781 716 792 5.31 5.26 5.19 2.706 688 2.671 710 2.613 665 Cronbach’s Alpha: 0.700 763 742 787 10.66 10.40 10.63 10.68 645 648 582 665 Store Image 3.741 471 3.982 464 3.647 570 3.921 437 Cronbach’s Alpha: 0.746 SI1 SI2 SI3 SI4 11.29 11.74 11.65 11.62 Perceived Quality 3.480 446 3.163 581 3.183 601 3.229 535 Cronbach’s Alpha: 0.782 738 664 653 690 PQ1 PQ2 PQ3 PQ4 PQ5 14.99 14.95 15.26 15.10 15.06 Purchase Intention 6.116 419 5.549 630 5.923 536 5.360 655 5.862 558 Cronbach’s Alpha: 0.817 788 717 749 707 741 2.066 2.429 2.252 780 739 730 Physical Risk PHYR1 PHYR2 PHYR3 Familiarity FAMI1 FAMI2 FAMI3 FAMI4 PI1 PI2 PI3 7.60 7.53 7.44 649 686 688 79 | P a g e Appendix E EXPLORATORY FACTOR ANALYSIS Scales Components FR1 -.112 847 133 -.074 148 -.022 -.076 FR2 FR3 -.120 -.078 833 -.084 -.059 142 200 -.031 -.063 -.051 -.149 PR1 PR2 -.139 -.125 747 257 100 166 292 276 186 002 -.040 -.045 -.049 -.019 -.122 PR3 -.120 170 132 -.058 003 -.159 PHYR1 -.238 200 -.034 -.022 -.158 PHYR2 PHYR3 FAMI1 FAMI2 -.107 -.154 170 -.012 240 191 -.041 -.007 753 762 745 099 188 742 856 794 172 -.064 -.094 -.104 055 210 237 076 -.111 -.067 -.007 690 649 -.156 -.140 244 396 FAMI3 FAMI4 SI1 SI2 SI3 SI4 PQ2 PQ3 091 085 087 220 199 160 -.061 -.012 168 -.157 -.050 -.084 -.061 -.076 -.114 -.237 001 -.010 -.081 -.094 -.266 -.137 208 194 545 761 746 726 184 119 -.077 -.013 -.251 018 -.024 000 -.158 -.030 786 683 169 110 180 -.034 131 109 -.078 -.104 385 014 101 158 176 020 PQ4 PQ5 -.127 -.092 -.072 -.069 292 177 -.113 -.153 -.006 108 293 101 PI1 675 737 400 -.266 -.262 237 -.167 155 PI2 PI3 Eigenvalue 169 275 7.370 -.153 -.113 2.621 -.216 -.306 1.653 175 212 1.400 -.136 -.122 1.164 061 102 1.036 501 764 1.011 30.709 10.922 6.887 5.832 4.850 4.317 4.211 Variance Extraction 629 773 673 80 | P a g e Appendix F: STANDARDIZED REGRESSION WEIGHTS 81 | P a g e Appendix G THE SEM RESULT OF RESEARCH MODEL WITH MODERATING EFFECT (Standardized) 82 | P a g e ... Research scope The research focuses mainly on investigating consumers who usually shop in supermarkets located in Ho Chi Minh City The period of collecting the data including qualitative and quantitative... with national brand 10 | P a g e In fact, while national brands have usually a mass production with huge facilities and marketing efforts, private labels have advantages in reducing intermediaries,... perceived as private labels Actually, offering private labels is considered as a smart strategy because of not only rising margin for themselves but also attracting customers and gaining their