What marketing factors affect to buying decision making of nhon hoangs products in vietnam

WHAT MARKETING FACTORS AFFECT TO BUYING DECISION MAKING OF NHON HOANG PRODUCTS IN VIETNAM STUDENT’S FULL NAME STUDENT ID INTAKE ADVISOR’S NAME & TITLE WHAT MARKETING FACTORS AFFECT TO

WHAT MARKETING FACTORS AFFECT

TO BUYING DECISION MAKING OF NHON HOANG PRODUCTS IN VIETNAM

STUDENT’S FULL NAME

STUDENT ID

INTAKE

ADVISOR’S NAME & TITLE

WHAT MARKETING FACTORS AFFECT

TO BUYING DECISION MAKING OF NHON HOANG PRODUCTS IN VIETNAM

: CGS00019593 : 09/2015 ADVISOR’S NAME & TITLE : DR BUI PHI HUNG

FEBRUARY 2017

RESEARCH PROJECT

(BMBR5103)

WHAT MARKETING FACTORS AFFECT

TO BUYING DECISION MAKING OF

NHON HOANG PRODUCTS IN VIETNAM ?

RESEARCH PROJECT

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AVISOR’S ASSESMENT

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Advisor’s signature

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In particular, I would like to express my sincere gratitude to Dr Bui Phi Hung, who has spent much time and effort to help me complete the dissertation Simultaneously, I also want to thank my classmates for their support for this thesis

in particular and the whole program in general

I also want to give my big thanks to Nhon Hoang company, partners and customers

of Nhon Hoang company who have supported me to complete the data collection for my research project

Once again, thank everyone for having accompanied me throughout this journey

Ho Chi Minh, 2017

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EXECUTIVE SUMMARY

The main objective of this research is to review the present marketing mix affects to the customer decision making This research provides an idea to the marketers and can be used as tools to assist them in pursuing their marketing objectives

The research was conducted from November 2016 to Feb 2017 The targeted customers participating in the research are the customers of Nhon Hoang chosen randomly After reviewing the literature, Marketing Mix model of Kotler, P., & Armstrong, G (2009) are applied as the conceptual framework to measure what marketing factors affect to buying decision making of Nhon Hoang products in Vietnam The study only uses quantitative approach

The finding of this study also show which dimensions and items are important to enhance sales figures of Nhon Hoang products In details, through five stages of the process, all of marketing factors have effect to customers’ buying decision making Even though there are some limitations in this research, this study might help Nhon Hoang company understand their customer buying behavior Based on the finding and suggestion, managers can know which one they need to change for improving and developing more in the future

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TABLE OF CONTENTS

CHAPTER 1 : INTRODUCTION 1

1.1 Introduction 1

1.2 Background 1

1.3 Company introduction 2

1.4 Product introduction 3

1.5 Research Question 4

1.6 Research Objective 4

1.7 Research scope 5

1.8 Thesis outline 5

1.9 Conclusion 6

CHAPTER 2 : LITERATURE REVIEW 7

2.1 Marketing mix 7

2.1.1 Product 8

2.1.2 Price 11

2.1.3 Place 13

2.1.4 Promotion 19

2.2 Consumer behavior 22

2.3 Consumer decision making process 25

2.4 Marketing strategy and consumer behavior 25

2.5 The effect of the elements of marketing mix on consumer behavior 27

2.5.1 Product – Consumer behavior 27

2.5.2 Price – Consumer behavior 27

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2.5.3 Place – Consumer behavior 28

2.5.4 Promotion – Consumer behavior 28

2.6 Conclusion 29

CHAPTER 3 : RESEARCH METHODDOLOGY 30

3.1 Introduction 30

3.2 Research progress 30

3.3 The Sampling Method 33

3.3.1 Sampling technique 33

3.3.2 Sample size 34

3.4 Questionnaire 34

3.5 Reliability 36

3.6 Ethical consideration 37

3.7 Conclusion 38

CHAPTER 4 : FINDING 39

4.1 Descriptive statistics 39

4.2 Reliability test – Verify Cronbach’s Anpha 46

4.3 Exploratory Factor Analysis (EFA) 51

CHAPTER 5 : DISCUSSION 57

5.1 Product 57

5.2 Price 58

5.3 Place 60

5.4 Promotion 62

5.5 Official model 63

CHAPTER 6 : CONCLUSION AND RECOMMENDATIONS 65

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6.1 Conclusion 65

6.2 Recommendations 65

6.2.1 Product 65

6.2.2 Price 66

6.2.3 Place 66

6.2.4 Promotion 66

6.3 Limitation 66

6.4 Recommendation for further research 67

REFERENCES i

APPENDICES vii

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LIST OF TABLES

Table 4.1: The agreement degree of factors affect to buying decision making of

Nhon Hoang products 41

Table 4.2: The statistics of product factor’s respondents 43

Table 4.3: The statistics of price factor’s respondents 44

Table 4.4: The statistics of place factor’s respondents 44

Table 4.5: The statistics of promotion factor’s respondents 45

Table 4.6: The statistics of all factors’ respondents 45

Table 4.7: Verify Cronbach’s Alpla of Product Factor 46

Table 4.8: Verify Cronbach’s Alpla of PriceFactor 47

Table 4.9: Verify Cronbach’s Alpla of Place Factor 48

Table 4.10: Verify Cronbach’s Alpla of Place Factor 49

Table 4.11: Verify Cronbach’s Alpla of Promotion Factor 50

Table 4.12: Verify Cronbach’s Alpla of all Factors 51

Table 4.13: KMO and Bartlett’s test 52

Table 4.14: The total variance explained of independent variables 52

Table 4.15: The first EFA analysis Component Matrix 54

Table 4.16: The final EFA analysis - Rotated Component Matrix 55

Table 5.1: Response per statement for the Product factor 57

Table 5.2: Response per statement for the Price factor 58

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LIST OF FIGURES

Figure 2.1: The elements of marketing mix 7

Figure 2.2: Channels for consumer products 15

Figure 2.3: Overall model of consumer behavior 24

Figure 2.4: Consumer decision process 25

Figure 2.5: Dissertation model 29

Figure 3.1: Research progress 32

Figure 4.1: Gender 39

Figure 4.2: Gender 40

Figure 4.3: Income 41

Figure 5.1: Response per statement for the Product factor 58

Figure 5.2: Response per statement for the Price factor 59

Figure 5.3: Response per statement for the Place factor 61

Figure 5.4: Response per statement for the Promotion factor 63

Figure 5.5: Official model 64

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CHAPTER 1 : INTRODUCTION

1.1 Introduction

A marketing strategy can be described as the pattern of current and future objectives, resource deployments and interactions of an organization with markets, competitors, as well as other environmental factors (Hollensen, 2003) The reason being that the marketing strategy guides an organization on how to satisfy the needs and wants of its target market Satisfied customers are motivated to become loyal customers, thereby ensuring repeat purchases resulting in higher profits (Machado & Cassim, 2002) This chapter outlines the case for this research project In particular, it discusses the significance of marketing factors to customer’s buying decision making and, subsequently, introduce the research; discuss the background and scope of the research, present the structure for this dissertation It will discuss the aims and the specific objectives of the research, and a brief description of the approach taken to achieve these objectives

1.2 Background

Vietnam is deeper integration into the global economy, especially via such a comprehensive free trade agreement The establishment of the ASEAN Economic Community, the signing of a number of free trade agreements in 2015 and the Trans Pacific Partnership on 4 February 2016, Vietnam has undergone internal reforms such

as Decree No 60/2015/ND-CP and the new laws on investment and enterprise, brings various opportunities and challenges (Nguyen Duc Thanh et al., 2015)

The increase in international companies and global corporations make a change in Vietnam market More and more competitors enter the market with new technologies and strong capital The customers also require products with high quality, low price and safety In recent years, enterprises increasingly establish their marketing strategy

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based on the consumer (He, H & Li, Y., 2010)

Vietnam consumer market trend in 2016 is the rise in purchase power in 2016 Over the past 10 years Vietnam has experienced rapid economic development The number

of high income households earning over US$500 per month per household, has risen from 1.8 million to over 4 million (Cimigo, 2016) Advertising has grown fast, the increase in numbers of brands and the rise of domestic companies (especially in foods, beverages and healthcare) embracing the consumer economy in Vietnam Advertising

in Vietnam expenditure grew nearly 600% in 10 years (Cimigo, 2016)

Therefore, traditional Vietnamese companies need to change the way in their business, especially marketing strategies as well as marketing research Marketers have acknowledged the importance of consumer attitudes and discussed marketing strategy with consumer behavior (Vinson, et al., 1977) They should do marketing research which is to gather data about customers in the present markets to understand what customers really want and to monitor trends in the markets, as well as to conduct research to help decision maker choose the appropriate strategies

1.3 Company introduction

Nhon Hoang is one of traditional food companies at Cai Be Village in Tien Giang Province where produces the most quantity of these cakes The government presented Cai Be village a title: “Cai Be coconut paper trade village”

Company has established since 1992 Nhon Hoang specializes in producing coconut paper In 2016, company has 70 employees, produces about 2000kg output per day Nhon Hoang produces three kinds of cakes with different flavors:

 Milk coconut paper

 Durian coconut paper

 Sesame coconut paper

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In Tet holiday, Nhon Hoang produces more two kinds of cakes:

 Grilled glutinous rice paper

 Grilled coconut paper

There are many kinds of packages with different weight and size: small size 10.5 inches (260g), medium size 11.5 inches (350g) and large size 12.5 inches (450g & 500g)

Nhon Hoang products are distributed in the South of Vietnam and some provinces in the Middle of Vietnam Collaborators of Nhon Hoang are mostly the rest stop stations and stores along the highway: Satra-Phuong Trang, Minh Phat rest stop station, Tam

Ri chain restaurants, Hung Thanh company, Lothamilk company,… Coaches pass there and take a rest about 20 minutes Passengers take a break, eat and buy something there One station welcomes thousands of passengers every day They consume a large number of products

In 2014, Nhon Hoang got gold medal “Vietnam Trust Food 2014” and the title “Safe food for health of community”

1.4 Product introduction

Traditional food systems of indigenous peoples have been recognized as important resources, and documentation of these in different parts of the world is progressing (Martina A Schmid, 2005) Milk coconut paper is a traditional food of Western Vietnam Travelers often buy this cake as a gift when they pass this area

The origin of this cake is from grilled glutinous rice paper cake The custom in the South of Vietnam is every household makes grilled coconut paper cakes and grill them

to worship their ancestors in Tet holiday over 100 years ago Besides that, they also want to eat instantly, so milk coconut paper was created Now a day, local people divide this cake into three main kinds of cakes:

+ Grilled glutinous rice paper: made from glutinous rice, coconut milk and

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sugar

+ Grilled coconut paper: made from manioc, coconut milk and sugar

+ Milk coconut paper: made from manioc, coconut milk, sugar, malt and

sweetened milk (some kinds of cake are added durian or sesame)

1.5 Research Question

The research question for this dissertation was “What marketing factors affect to buying decision making of Nhon Hoang products?” This question will allow the researcher to explore which factor influence to customer’s buying decision of Nhon Hoang products and how marketing factors affect to Nhon Hoang’s customer buying decision making There are four marketing factors: Product, Price, Place, Promotion

The following questions are derived from the main research question:

How does the factor Product affect to buying decision making of Nhon Hoang products?

How does the factor Price affect to buying decision making of Nhon Hoang products? How does the factor Place affect to buying decision making of Nhon Hoang products? How does the factor Promotion affect to buying decision making of Nhon Hoang products?

1.6 Research Objective

The main objective of the research is to determine the effect of marketing factors consist of product, price, place, promotion on customer’s buying decision making of Nhon Hoang products Therefore, the results will help the company increase customers through marketing strategies

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This research aims to:

Find out the marketing factors that affect to buying decision making of Nhon Hoang products

Analyze the key marketing factors which impact to customer’s decision making of Nhon Hoang products

Enhance the ability of Nhon Hoang company to achieve excellent standard in their business

1.7 Research scope

This research will examine the link between marketing factors and buying decision making of Nhon Hoang products The research will be made from October 2016 to December 2016 at Satra-Phuong Trang, Long Thanh rest stop station, and some stores along highway 1A in the Western of Vietnam

Due to time restraints, the sample will be limited to 300 customers This may mean that the results cannot be generalized to the whole population

1.8 Thesis outline

This research includes five chapters which are showed bellows:

Chapter 1: Introduction – Starting general introduction of Nhon Hoang company and their products It has also discussed the objectives, scope and method of this study Chapter 2: Literature Review – Reviewing literature related concepts, marketing factors effect to buying decision making of Nhon Hoang products and then drawing the research model

Chapter 3: Methodology – Giving the detail of research data, quantitative method used

in this study, data collection and data analysis

Chapter 4: Finding – Giving the result obtained of primary data collection from the

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This chapter has introduced the research and outlined the aims and relevance of it It has discussed the scope of the research and created a research question that can be investigated The next chapter will present existing literature surrounding the question

“What marketing factors affect to buying decision making of Nhon Hoang products?” This will give background knowledge for the topic and will be informative about what has previously been investigated

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CHAPTER 2 : LITERATURE REVIEW

This chapter will focus on the consume

different components of the marketing mix

to influence the demand for its offerings (Kotler & Armstrong,

The organization designs an integ

control Figure 2.1 represents the elements of marketing mix: Product, Price, Place, Promotion For the purposes of this study, each of the elements of the marketing mix will be discussed in more detail belo

Figure 2.1: The elements of marketing mix

ontrol to produce the response it requires from the target market The marketing mix is composed of all the activities which an organization can perform

to influence the demand for its offerings (Kotler & Armstrong, 2009

The organization designs an integrated marketing mix made up of factors under its

.1 represents the elements of marketing mix: Product, Price, Place, Promotion For the purposes of this study, each of the elements of the marketing mix will be discussed in more detail below

Figure 2.1: The elements of marketing mix (Kotler, P., & Armstrong,

ontrol to produce the response it requires from the target market The marketing mix is composed of all the activities which an organization can perform

2009)

rated marketing mix made up of factors under its 1 represents the elements of marketing mix: Product, Price, Place, Promotion For the purposes of this study, each of the elements of the marketing mix

P., & Armstrong, G., 2009)

4 P's

PROMOTION

Advertising Personal selling Sales promotion Direct marketing Public relations

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2.1.1 Product

McCarthy and Perreault (2003) describe a product to be a good or service aimed at a specific target market Blackwell et al (2006) state that product includes goods and services with tangible and intangible attributes They further mention that products may be bought for different reasons ranging from satisfying a basic need to indulging

in something that feels good

Palmer (2000) states that the elements of a product that can be controlled by a marketer include variety, features, brand name, packaging, design, quality and services

2.1.1.1 Variety

Product variety is referring to the different number of products that is included in one product line Strong competition in the market place and demanding customers have contributed to the increase of product variety in many product categories An increase

in product variety does not guarantee profit increase Since product variety is influenced by the changing requirements of consumers, the quality of the introduced product will also vary In the modern business world, it is challenging for organizations to manage product variety However, those organizations which are able

to match their supply chain structure with the type of product variety that they have to offer to the target market, outperform those that are unable to match their supply chain structure (Davila & Wouters, 2007)

The introduction of new products is essential, because it improves the welfare of consumers Some effects of the introduction of new products are that consumers will have surplus associated with the additional variety provided by new products Competition will be strong among existing products due to the introduction of new products If an organization that introduced a new product into the market has no existing products in the market, it is likely to lead to the reduction of prices for all competing products which will benefit consumers (Hausman & Leonard, 2002)

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2.1.1.2 Features

Product offerings have different features that can be grouped into three levels namely, the core, the expected and augmented levels The product offering consists of elements that make an offering to be enjoyed by the consumer It is essential for marketers to pay attention to the elements that make up a product to ensure that it meets customers’ expectations and leads to repeat purchases (George, 2004) Hoffman et al (2005) stipulate that products consist of a bundle of benefits that are develop through product decisions and a new product development process

The features and value of a product are the results of compromises between varying requests The requests can come from the producing organizations due to interaction with customers, the technological development functions of many directly or indirectly related organizations, and different roles of independent intermediaries, such as distributors (Hakansson & Waluszewski, 2005)

2.1.1.3 Brand name

George (2004) describes a brand as a product or service made distinctive by its positioning relative to the competition, and by its personality in the context of the target market The brand names of products are sometimes regarded to be more valuable than the offerings they present Brand names furthermore encourage consumers to purchase offerings because they provide them with the benefits which they need Du Plessis et al (2005) state that brand distinguishes competing products in the market Organizations use brands to differentiate their products from those of their competitors According to Cravens and Piercy (2006), the following functions of brands can exist for consumers:

The quick identification of products reduces consumers’ search costs

Providing assurance of quality which reduces consumers’ perceived risk

Reduce social and psychological risks that are associated with using the wrong

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product

2.1.1.4 Packaging

Marketers develop packaging for an offering in a manner that it will perform functions such as promotional, protective and user-convenience (Hoffman et al., 2005) Packaging decisions need to consider the efficiency of the production process, consumer acceptance and the need to protect while it is in storage and transit (Bradi, Coyle & Novack, 2006)

2.1.1.5 Design

Factors such as climate and geography are considered by organizations when they design their offerings Marketers need to ensure that the ingredients or features of their offerings are not violating legal requirements, the religion or the social customs of customers (Hoffman et al., 2005) The design of a product has an influence on the appearance of a product, increases the value of a product and also attracts non-users (Vranesevic, T., Vignali, C & Vignali, D, 2004)

2.1.1.6 Quality

An organization that produces products, considers a question of how much quality to build into the product In a product, quality constitutes the ability of a product to deliver the functional requirements expected of it Durability is the main dimension of quality Products of high quality are usually made from better materials that involve expensive processing The price the target market is prepared to pay has an influence

on the level of quality of the product (Dibb et al., 2001) When customers can realize after purchase that the products they bought are of low quality, they are more likely not to purchase them again in the future (Kurtz & Boone, 2006)

2.1.1.7 Services

The product related services and product intangibles that are commonly used by organizations are guarantees, repairs or replacements and credit Customers consider

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the type of guarantee provided by an organization before they make a purchase This is particularly relevant when customers purchase expensive and technically complex goods Marketers use guarantees as tools to give their products a competitive advantage They also use parts replacements and repair services to attract customers

2.1.2 Price

Price is the amount of money that a consumer must pay to obtain a product or service (Peter & Olson, 2005) An organization that is selling its product at a high price may not attain its sales volume targets If an organization sets the price of a product at a low level, volume targets may be attained, but no profit will be earned (Palmer, 2000) Peter and Olson (2005, p.464) specify that consumers need to ensure that they get value out of what they purchase Price must interact with other elements of the marketing mix to ensure that an offering is correctly price Price reflects the quality and value of an offering (George, 2004)

Sternberg (2004) stated that the relationship between price and value is illustrated by the statement that says “we can no longer look at manu prices or average checks to determine value” When customers view their dining experience as worth the price paid, then the meal will be seen as having value, regardless of the portion size of the individual’s fillet Below is a discussion of the pricing policies of organizations

2.1.2.1 List price

A list price is a price that a final consumer or user is requested to pay for a product (McCarthy & Perreault, 2003) A list price is the setting of one price without differentiating it according to the different segments of the market that an organization might target (Avlonitis & Indounas, 2005)

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2.1.2.2 Discounts

McCarthy and Perreault (2003) describle discounts as reductions given to buyers by sellers from list prices and these buyers either give up some marketing function or provide the function themselves A discount is an advertisement in which there is price reduction that is not involving a coupon or voucher (George, 2004) The magnitude of cash discount reflects information about product quality Organizations that produce low quality products are more likely to offer large discounts to induce consumers to pay before verifying product quality, thereby transferring risk to the consumer Organizations that produce high quality products are very confident that their product will meet customer requirements and will not offer high discounts to consumers (Pike, Cheng, Cravens & Lamminmaki, 2005)

Marketers offer different types of discounts such as cash, trade and quantity discounts (Kurtz & Boone, 2006) A cash discount is received by buyers when they pay in cash

or without delay (Hoffman et al., 2005) Trade discounts are paid to channel members for performing marketing functions (Kurtz & Boone, 2006) Finally, quantity discounts are offered to customers to encourage them to purchase in large quantities This kind of discount allows the seller to obtain a larger share of a buyer’s business (McCarthy & Perreault, 2003)

2.1.2.3 Allowances

Allowance refers to the promotional money that is paid by the manufacturers to the retailers in return for an agreement to feature the manufacturer’s products in a specific manner (Hollensen, 2003) Kurtz and Boone (2006) argue that allowances are similar

to discounts, because they specify deductions from list price The man categories of allowances are trade-ins and promotional allowances Trade-ins are often used when selling durable goods such as cars In the case of the trade-in method, the product’s basic list price remains unaltered, but the seller accepts the used product together with less money from the customer Promotional allowances involve the reduction of prices

as an attempt to integrate promotional strategies within distribution channels

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2.1.2.4 Payment period

In today’s competitive business world, organizations are offering their customers a specified period to settle their accounts (Sarker, Jamal & Wang, 2000) Interest is not charged o the outstanding amount if it is paid within a stipulated time period However, if the amount owed to the organization is not paid in full by the end of the stipulated period, then interest is charged on the outstanding amount (Teng, Chang, Chern & Chan, 2007)

An organization that has many customers is more likely to offer credit This can also apply to the length of payment period granted, because of the larger spread of customers that make it hard for strong relationships to be formed between two parties Under these conditions sellers may build relationships and enhance the popularity for quality by extending the payment period (Pike et al., 2005)

2.1.2.5 Credit terms

An organization can provide credit service to customers Marketers of expensive products such as furniture and technology products can offer credit to enable a large number of customers to purchase these products and enlarge the market for their products (Dibb et al., 2001) Credit terms can be seen as a solution to problems concerning product quality and customer creditworthiness This is relevant for high technology products that take long to verify The credit period is also seen as a product verification period (Pike et al., 2005)

2.1.3 Place

Popovic (2005) refers to place as all marketing channels, location and activities such

as readiness to make the product accessible to the target market Place includes communication with customers that depends on the time difference of geographical areas and the delivery of free samples Hakasson and Waluszeski (2005) stipulate that

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the place is an “issue that is equal with handling and distribution channel that brings the given product to its potential users, and the main task is to link an existing supply with an existing demand”

Place can also refer to the accessibility of a service by potential customers The inseparability of services complicates the passing of the benefits of service The inseparability of a service implies that one person cannot be able to produce a service

at one place and make it available to customers in another place A service cannot be manufactured in a low cost area and sold where demand is high (Palmer, 2000)

Place is an important element of the marketing strategy Place and the other three Ps of the marketing mix, namely product, price and promotion need to be developed together to meet the need and wants of the target market (Hakansson & Waluszeski, 2005) Competitors can sell the same product, using the same promotional methods and at the same price to compete other suppliers in the market place (Hoffman et el., 2005)

2.1.3.1 Channels

Organizations need to carefully choose their distribution channels and evaluate their sales and profit levels, performance records, other carried products, clientele and availability of a distribution channel when needed The reason for this being to ensure that the distribution channel does not prioritize distribution of the competing products The other elements of the distribution channel that need examination include organizational objectives and resources, market characteristics, buying behavior, product attributes and environmental forces to evaluate the strengths and weaknesses

of an organization (Machado & Cassim, 2002)

Distribution channels serve many functions such as creating utility, facilitating exchange efficiencies, alleviating discrepancies, standardizing transactions and providing customer service (Dibb et al., 2001) A distribution channel can be long or short, single or multiple, direct or indirect There are different distribution channels for

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different products because the products that are distributed vary according to size and price (Adcock et al., 2001) A distribution channel that is simple and short is a direct channel In a direct channel there are no intermediaries between the producer and its customers (Kurtz & Boone, 2006)

In indirect channels there are many intermediaries that perform different functions for

an offering to reach the target market Due to the length of the distribution channel, it

is not easy to cope with the problem of having products out of stock It is important to note that the longer the distribution channel, the more difficult it is to cope with differences in consumer demand (Adcock et at., 2001)

Figure 2.2: Channels for consumer products

2.1.3.2 Coverage

Coverage refers to the geographical areas of a country such as cities and major towns,

or the number of retail outlets Regardless of the market coverage measure used, an organization needs to create a distribution network that can include dealers, distributions and retailers to meet its coverage goals (Hollensen, 2005) It is important for an organization to have access to suitable distribution channels, as inaccessibility

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to distribution channels has been cited as the reason behind the failure of many market ventures (O’Cass & Julian, 2003)

The three main levels of market coverage are intensive, selective and exclusive distribution Intensive distribution involves using the available outlets to distribute a product (Adcook et al., 2001) Intensive distribution is relevant for distributing convenience products such as bread, beer, chewing gum and newspapers (Dibb et al., 2001) Selective distribution, on the other hand, encompasses choosing specified outlets to distribution a product The products distributed through selective distribution include electrical appliances or photographic specialists who are able to offer a professional service to customers (Adcook et al., 2001) Finally, exclusive distribution refers to a situation in which the manufacture grants exclusive rights to a specific outlet to sell its products in a specific geographic area (Kurtz & Boone, 2006)

2.1.3.3 Assortments

An assortment implies grouping products together to provide customer benefits (Hoffman et al., 2005) Assortment is in most cases done by people closest to the final customers who attempt to supply a wide assortment of products for the convenience of customers (McCarthy & Perreault, 2003)

The product of the wholesaler is the assortment of products and services that it is offering to consumers The wholesaler is able to select items and build assortments that are needed by the customers, thereby saving them search time (Kotler & Armstrong, 2003)

2.1.3.4 Locations

The location of producers is a function of factors such as the availability of raw materials, labour costs and a number of other factors that may have limited relation to where the consumers of those products are situated (Czinkota, Dickson,…, 2000) The location of warehouses and the means of transportation used to deliver the goods

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determines the level of service provided to consumers The location of warehouses has

an impact on sales and profits because if consumers find their preferred products in store, they purchase them and increase an organization’s profits (Bardi et al., 2006)

An organization that is located near customers can lower distribution costs (Hollensen, 2003)

2.1.3.5 Inventory

The main reason for keeping an inventory is to record and maintain product movement

in the delivery pipeline to meet demand Some of the costs that are involved in managing inventory include storage, interest on capital tied up, taxes and lost sales It

is the responsibility of the management of an organization to reduce these costs by determining a proper level of inventory to hold and to maintain a balance between customer service and inventory cost A decision on the level of inventory to keep should be determined by order cycle time and customer service levels The order cycle time involves the time between the placement of an order and the receipt of goods Delivery times will differ depending on the mode of transport used Customer service level is the ability to satisfy customer orders within a certain time (Hollensen, 2003) Inventory management is the buffer in logistics There are times when producers need

to keep huge amounts of products, and times when demand exceeds supply and stockpiled products are released onto the market This emphasizes the importance of managing inventory efficiently (Blythe & Zimmerman, 2005)

2.1.3.6 Transportation

Transportation decisions have an impact on the costs of finance, production and marketing (Bardi et al., 2006) Marketers play an important role in facilitating the transportation of products by ensuring that customers get the products they want, where and when they need them Transportation accounts for high percentage of the total cost of logistics (Czinkota et al., 2000)

The mode of transport used by an organization affects the level of inventories to be

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kept and the quality of service provided to customers Transportation is a service, but has characteristics that make purchasing this service similar to buying goods The movement aspect of transportation includes speed, reliability and the frequency of the service The equipment aspect of transportation affects shipment preparation, the size

of shipment and loading and unloading costs (Bardi et al., 2006)

Some objectives of transportation include activities such as the elimination cost of transportation errors, reduction of costs of customer dissatisfaction resulting from slow

or late deliveries, and the elimination of handling costs (Pooler, Pooler & Farney, 2004)

in logistics include the development of delivery schedules, development of packaging

to meet the need for physical strength and security, selection of subcontractors to perform specific tasks, planning and organizing the storage area layouts, and the type

of handling equipments involved (Blythe & Zimmerman, 2005)

Logistics services can be used as a marketing tool to enhance sales by making goods available when required by consumers If logistics service providers are offering an unacceptable service, it can cause a loss in sales volume Organizations that are offering logistics services that reduce a customer’s cost will have a competitive edge

in the marketplace Decisions on logistics services must therefore ensure high service levels and no shortages (Bardi et al., 2006)

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2.1.4 Promotion

Hawkins et al (2001) stipulate that marking communications include advertising, the sales force, public relations, packaging, and other signals that the organization provides about itself and its products Hoffman et al (2005) argue that the main functions of marking communications are to inform, persuade or remind consumers about products that are available on the market, and to reinforce them in the minds of consumers Promotion should be used to inform customers about the entry of new products into the market, how to use them, where to find them and to positively influence their sale

The marketing communication elements are grouped together to make an offering available to the target market, hoping to influence the target market to buy a particular brand Marketers use different forms of marketing communication to attract customers (Yadin, 2002) These forms include advertising, personal selling, sales promotion, publicity and public relations (Cant et al., 2006)

2.1.4.1 Advertising

Dibb et al (2001) stipulate that advertising encompasses a paid from of non-personal communication about an organization and its products that is transmitted to a target audience through a mass medium such as television, radio, newspapers, magazines, direct mail, public transport, outdoor displays, catalogues or the internet Advertising

is used by people and organizations to promote goods, services, ideas, issues and other people The flexibility of advertising enables it to reach a large target audience or focus on a small defined segment of the population George (2004) highlights that advantages of advertising are that it is a cost effective method for communicating with large audiences, and that it has the ability to target niche markets by choosing media viewing or listening times

The importance of advertising is highlighted by the fact that it can quickly increase

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brand awareness and brand knowledge The impact of advertising cannot be easily measured (Duncan, 2005) According to Shimp (2003), advertising is valued because it performs five critical communications functions namely, informing, persuading, reminding, adding value and assisting other organizational efforts Informing refers to advertising that makes consumers aware of new brands and educates them about the features of the brand and the benefits that are offered by the brands Advertising is also teaching consumers how to use new brands Persuading implies that effective advertising motivates customers to use the advertised products and services Advertising provides customers with reasons for choosing one brand over another Advertising provides customers with reasons for choosing one brand over another Reminding stipulates that advertising keeps an organization’s brand in the minds of consumers Advertising is influencing brand switching by reminding customers about the favorable attributes possessed by a brand Added value refers to how an organization can add value to its offerings by innovating, improving quality and changing consumer perceptions Advertising results in brands being viewed as more stylish and of a higher quality Finally, assisting other organizational efforts refers to how advertising is selling an organization’s offering in advance, and provides sales people with an introduction ahead of their personal contact with customers

2.1.4.2 Personal selling

Personal selling is a person to person communication between sellers and potential customers Personal selling involves direct contact with one person or many people Feedback is immediately received and enables marketers to adjust a sent message to improve communication (Dibb et al., 2001) Personal selling provides an opportunity

to adjust a message, because the sales person is able to change the message to the customer while responding to the latter’s behavior (Wilmshurst & Mackey, 2002) The marketing organization needs to ensure that the expense is justified before incorporating personal selling into the marketing mix due to its high cost (Koekemoer, 2004)

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Personal selling helps the marketer to determine the customers’ information needs and requirements Personal selling assists an organization to update customer information

It is essential to ensure that personal selling enables communication, verbal and verbal to transmit the unified message of the organization (Koekemoer, 2004) Cravens and Piercy (2006) argue that personal selling has strengths, such as the ability

non-of salespeople to interact with customers to answer questions, the ability to target customers, and the capacity to gather market knowledge and provide feedback

2.1.4.3 Sales promotion

According to Kotler (2003), sales promotion is a key ingredient in many marketing campaigns since it consists of a diverse collection of incentive tools, mostly short term, designed to stimulate trial, or quick or greater purchase of particular products or services by consumers or the trade The elements of sales promotion include consumer promotion, trade promotion and sales-force promotion George (2004) stipulates that incentive tools are used to recruit new users, to reward faithful customers, and to increase the rate of purchase by the occasional users Sales promotions are used to attract customers who switch brands and, who are primarily looking for low prices and good value These sales promotions cannot make brand switchers to be faithful customers The never-stopping price off, coupons, deals, and premiums of sales promotions, may reduce the value of the production offering in the minds of customers

Sales promotion take place for a limited period of time with a specific reason (Koelemoer, 2004) Sales promotion consists of many promotional activities that include trade shows, contests, samples, point-of-purchase displays, trade incentives and coupons Sales promotions are more expensive used to target customers, respond

to special occasions, and create an incentive for purchase (Shimp, 2003)

2.1.4.4 Publicity and public relations

Publicity refers to non-personal communication in news story form about an

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organization or its products, or both, that is transmitted through a mass medium at no charge The different forms of publicity include magazines, newspapers, radio and television news Publicity involves non-personal communication to a mass audience and is not paid for by an organization It is said that if advertising is the hammer, then publicity is the nail because it provides credibility for advertising Organizations create publicity by creating special events, holding press conferences, preparing news releases and media kits (Kutz & Boone, 2006)

Public relations, on the other hand, is referring to the communications and relationships which an organization has with its publics that include customers, suppliers, stockholders, employees, government, the general public, and the society in which an organization is operating (Kurtz & Boone, 2006) Public relations for an organization and its products involve communications placed in the commercial media free of charge to an organization that receives publicity The main task of public relations is to encourage the relevant media to cover information that is released by an organization in media communications The activities of public relations can make a contribution to the promotional strategy of an organization when aimed to attain the objectives of promotion of a particular organizational offering (Cravens & Piercy, 2006) Public relations engage people, motivate behavior and makes big impressions Public relations attempt to spread the good word about an organizational offering (Palmer, 2008)

2.2 Consumer behavior

Consumer behavior provides marketers with information about what consumers need and want, how marketing program should be designed Du Plessis and Rousseau (2003) state that the survival of organizations in a competitive environment depends

on their understanding of consumer behavior, inclusive of the buying patterns of individual consumers

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The product or service preferences of consumers are constantly changing In order to address this constant state of flux and create a proper marketing mix for a well-defined market, marketing managers must have a thorough knowledge of consumer behavior Consumer behavior refers to how consumers make purchase decisions, and how they use a dispose of the purchased goods and services In addition, the field of consumer behavior also includes an analysis of factors that influence purchase decisions and product use (McDaniel, Lamb & Hair, 2008)

People develop self-concepts and lifestyles that are based on various external and internal factors These developed self-concepts and lifestyles yield needs and desires which require consumption decisions to ensure satisfaction The process of consumer decision making experiences with specific situations and the presence of needs, produce an influence on the consumers’ self-concept and lifestyle by affecting their internal and external characteristics (Hawkins & Mothersbaugh, 2007)

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Figure 2.3 Overall model of consumer behavior (Hawkins & Mothersbaugh, 2007)

Consumer purchases are influenced by social, culture, personal and psychological characteristics as shown in Figure 4 For the most part, marketers cannot control these factors (Kotler & Armstrong, 2009), but they need to understand and put them into account when making marketing decision However, they influence consumer’ behavior by influencing their consumption Marketers not only focus on identifying what their customers want, they aim to make customers realize what they need Nowadays, consumer behavior is also determined by what and how they buy (Solomon, 2010)

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2.3 Consumer decision making process

Figure 2.4: Consumer decision process

Figure 7 shows five stages of considerations that arise when a consumer faces a new and complex purchase situation It is clear that the buying process starts long before and proceeds after the actual purchase (or not to buy decision) In different types of decision making listed above (nominal, limited and extended) consumers often skip or reverse some the stages However, marketers need to focus on the entire buying process (Kotler and Armstrong, 2009)

2.4 Marketing strategy and consumer behavior

It is important to understand consumer behavior in order to formulate effective marketing strategies For the marketing strategy to be successful, it is essential to have

a good understanding of the behavior patterns of consumers (Du Plessis, Jooste & Strydom, 2001)

Cant et al (2006) stipulate that an organization that need to offer its customers best value should react faster to the needs of customers than competitors do An understanding of consumer behavior is essential to develop a marketing strategy that enables an organization to react to consumers’ needs and preferences The manner in which customers respond to an organization’s marketing strategy will illustrate the success or failure of an organization Hawkins et al (2004) argue that the reactions of customers to the marketing strategy of an organization also the success by which an organization is meeting the need of customers

Marketing strategy starts by analyzing the market considered by an organization This

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marketing strategy can be regarded as matching the organization’s resources (E.g capabilities, strength and weaknesses) with those of the external parties, namely competitors, suppliers and customers within the economic, technological and social factors in the environment In this strep, consumer analysis involves identifying groups

of individuals, households, or organizations with the same needs (Hawkins et al.,2004) The second step of an organization’s marketing strategy is market segmentation in which the market segments identified in a market analysis are described in terms of demographic, psychographic, as well as geographic loacation and others One or more of the identified segments are chosen to be a target by taking into account organization’s capabilities in relation to those of competitors (Cant et al., 2006)

Step three of the marketing strategy involves the penetration of the selected target market segments The aim of this step is to provide the customer with more value than competitors do, and to simultaneously generate profit for an organization An organization develops the marketing strategy in terms of the extended marketing mix (Zineldin & Philipson, 2007)

With regard to the consumers’ decision making process, the target market that is offered the total product is constantly involved in processing information and making decisions on whether to maintain or improve its lifestyle (Hawkins et al., 2004) Marketers should therefore attempt to continuously ensure high levels of customer satisfaction, since satisfied customers are more profitable in the long term Customers form an image of the total product from the manner in which it is offered to them by the firm The impact on the customer may result in need satisfaction, financial expenditure, attitude development or change For the broader society, the marketing process has an impact on economic growth, pollution, social problems and social benefits (Cant et al., 2006)

Consumers play an important role in the economy, since their support of retailers can influence the profitability level, future survival, as well as employment creation

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capacity of the organization It is therefore essential to understand consumer behavior, because their support for an organization can ensure increased profits, whilst their lack

of support can lead to its eventual closure (Blackwell et al., 2006) Organizations also need to obey different laws such as pollution controls, product safety, product labeling and truth in advertising (Assael, 2004)

2.5 The effect of the elements of marketing mix on consumer behavior

2.5.1 Product – Consumer behavior

Hawkins et al (2004) refer to a product as being “anything a consumer acquires or might acquire to meet a perceived need” Consumers purchase the products that offer them high quality, best performance and a variety of features (Schiffman & Kanuk, 2007) A customer orientation can help an organization to identify the key product attributes and analyze the contributions of attribute performance to consumer perceptions of value and satisfaction The impact of the different elements of product

on consumer perceptions can be used to guide product design and management (Bojanic & Kashyap, 2000)

2.5.2 Price – Consumer behavior

Price is an important ingredient for the promotion of a product It is used to promote sales by offering incentives such as short-term discounts, easy credit terms and interest free rates The use of price in promotions can lead consumers to focus on price rather than value and brand Customers might be willing to purchase only when prices are reduced (Wright, 2006) The features that are added to a product should be considered

to enable consumers to afford that particular product (Hein, 2008) It is essential to realize that consumers expect the price paid for a product to match product quality, perceived value and required satisfaction (Bojanic & Kashyap, 2000)

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2.5.3 Place – Consumer behavior

Stokes (2002) describes place as the manner in which products or services are made available to the target market It includes decisions on the choice of channels to distribute the products Peter & Olson (2005) stipulate that the channels of distribution have an impact on consumer affect, cognition and behavior The locations of stores influence what consumers think and feel, and what behaviors they perform, such as store contacts, product contacts and transactions

2.5.4 Promotion – Consumer behavior

The functions of promotion are to inform, persuade, or remind customers about the product that is offered in the marketplace Promotion informs consumers about where

to find a product, and how it can be used (Hoffman et al., 2005) According to Spears (2000), promotion plays an essential role in increasing consumer awareness about a new product or brand, and it is also used to renew interest in a product that is declining

in popularity Hoyer and Maclnnis (2001) identify promotional communication tools

to be advertising, sales promotion (premiums, contests, sweep stakes, free samples, coupons, rebates), personal selling and public relations

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Figure 2.5: Dissertation model

2.6 Conclusion

This chapter stipulated that the marketing strategy of an organization involves two aspects, namely decision-making activities regarding the organization’s target customers and its marketing mix development to appeal to the target market This is achieved by positioning the products and services of organization in a superior manner It was further highlighted that the effectiveness of the marketing strategy may

be judged by evaluating the variance between the customers’ perception of the market and an organization’s market offering (Sengupta & Chattopadhyay, 2006)

The next chapter will focus on the methodology applied to the study A comprehensive focus will be provided on the scope of the study, the sampling method, organization of the survey, validity and reliability of the questionnaire, data gathering technique applied, data analysis, as well as the reliability of the results

PRODUCT PRICE PLACE PROMOTION

BUYING DECISION MAKING

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CHAPTER 3 : RESEARCH METHODDOLOGY

3.1 Introduction

Research methodology is the framework associated with a particular set of paradigmatic assumptions that are used to conduct research The importance of research methodology is underlined by the fact that it explains or describes how research should be undertaken (O’ Leary, 2004)

This chapter specifies the population and selected sample of the study, the design of questionnaire, the data collection method selected, as well as the data analysis technique applied to the research study Finally, the questionnaire as a research instrument was also highlighted

3.2 Research progress

The research process originates from a problem or question which is being investigated and requires the clear formulation of objectives It encompasses a specific plan or procedure according to which the research is conducted, and divides the primary problem into secondary problem to improve the management of the research process In addition, the research process also required the gathering and interpretation

of data to solve the problem which the research process has initiated Research can therefore be applied to describe, understand, criticize and analyze current information more comprehensively (Newby & Ertmer, 1997)

The subject of my thesis is "What marketing factors affect to buying decision making

of Nhon Hoang products” For the good research, the first is having a deeply knowledge about the problem, then find out the main factors that impact to customer satisfaction From these, I determine there are theoretical bases and research papers making a foundation for all of research progress The theoretical bases and literature