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FOREIGN TRADE UNIVERSITY FACULTY OF INTERNATIONAL ECONOMICs =====000===== ECONOMETRICS REPORT FACTORS INFLUENCING COSMETIC PURCHASING BEHAVIOR OF CONSUMERS Members: Class: Nguyen Minh Chau – 1816340010 Nguyen Thi Kim Ngan – 1813340043 Vu Phuong Thao – 1813340061 Nguyen Dieu Thuong – 1813340064 KTEE301.1 (21/10-15/12/2019) Instructors: Dr Nguyen Thuy Quynh Hanoi, December 2019 Table of Contents ABSTRACT INTRODUCTION CHAPTER I: THEORETICAL BASIS OF THE FACTORS Definition 1.1 Consumer buying behavior 1.2 Beauty cosmetics products Literature review 2.1 Theories related to research 2.1.1 Five stages of consumer buying behavior 2.1.2 Consumer behaviour’s model 2.2 Related previous research 10 Research hypotheses 11 CHAPTER II: MODEL SPECIFICATION 13 Methodology 13 Model specification 13 2.1 Explanation of the variables 14 2.2 Description of the data 15 2.2.1 Overview 2.2.2 Statistical description 15 2.2.3 Correlation matrix among variables 15 17 CHAPTER III: ESTIMATED MODEL AND STATISTICAL INFERENCE 18 Estimated Model 18 1.1 Estimated result 18 1.2 Sample regression model 19 Test For Violation Of The CLRM Basic Assumption 19 2.1 Misspecification 19 2.2 Autocorrelation 20 2.3 Heteroscedasticity 20 2.4 Normal distribution of the disturbance 20 2.5 Multicollinearity 21 Hypothesis Testing 22 3.1 Test individual regression coefficients 22 3.2 Test the overall significance of the model 24 3.3 Meaning of the estimated regression coefficients 24 3.4 Coefficient of determination 25 3.5 Other analysis 25 CHAPTER IV: RECOMMENDATIONS AND FUTURE STUDY 27 Recommendation 27 Limitations and future study 27 CONCLUSION 29 REFERENCES 30 APPENDIX 32 Dataset 32 STATA estimation results 37 INDIVIDUAL ASSESSMENT 42 ABSTRACT This study aimed to identify the factors that influence the purchasing behaviour of local cosmetic products among students at Foreign Trade University as well as determine the worth, amount and quality of these factors Some of the variables consist of wage, gender and brand’s reputation In addition, the questionnaire will be used as a method to collect all data from respondent to accomplish the research objective Using descriptive analysis, correlation, and regression, the result of this study indicated that there is a significant relationship as to determine the factors that have tremendous influences on cosmetics purchasing behaviours of consumers This research paper helps to contribute an extra idea and knowledge to cosmetic conglomerates so that they get to know more about purchasing behaviour of consumers Keywords: cosmetic products, wage, gender, brand’s reputation INTRODUCTION Beauty has long been an indispensable need for women There are numerous different beauty solutions that can be consumed namely cosmetics, nutritional supplements, vitamins or beauty services It depends on economic conditions and time each person opt for themselves the most appropriate and effective method It is undeniable that along with the advance of science and technology, today’s beauty industry has made remarkable strides and has become one of the leading industries in the world Various types of cosmetics then are more efficient, more secure and capable of taking faster effect Previous cosmetic products used to take consumers time to achieve the results and in few circumstances, those had brought side effects or negative effects to users such as skin irritation, skin allergies Therefore, instead of being used as a product to support the beauty process, today’s cosmetics are categorised into distinct types to suit each person’s complexion Additionally, purchasers now can have personal consultants help them make the right choice and avoid unfortunate consequences Therefore, in recent years, Vietnam has been influenced by the beauty trends around the world, and the perception of male beauty has gradually changed Men nowadays pay more attention to their appearance as well as cosmetics However, there are a fairly massive number of males that, though in need, still hesitate embellishment The potential for development of the beauty market is huge, especially for teenagers like students while Vietnam currently does not have many studies focusing on men Therefore, we find it necessary to have a specific study to find out what the determinants affecting the purchasing behaviour of cosmetics of both genders According to previous publich research, these are the most significant factors: Wage: We find out that the price is important when consumers decide to buy a product If the price is affordable, there is a likelihood that they will buy the product In addition, each person have an intention of picking a product to suit their economic condition Therefore, the wealthier people are, the more they are willing to pay for cosmetics Gender: Studies have shown that there is an increase in buying beauty products behaviour of both sexes, however, the proportion of female purchasers outweighed the opposite sex buyers Brand’s reputation: Brand’s reputation is an important element in drawing in customers A consumer must recognize the brand image and quality of a product before proceeding to buy the product Hence, brand loyalty will influence a consumer’s decision whether or not to use a product We – Vu Phuong Thao, Nguyen Minh Chau, Nguyen Dieu Thuong, Nguyen Thi Kim Ngan will focus on analysing “Determinants that affect cosmetic buying behaviour of consumers” Through the process of researching, analysing data, we desire to achieve: Firstly, identify factors that affect considerably the cosmetic buying behaviour of consumers Secondly, build a regression model to show the impact and how significant these factors affect the purchasers behaviour Thirdly, overcome defects of model and explain the statistical significance of these factors Object and scope of the study: The object of our research are factors influence on the cosmetic purchasing behaviour or the cosmetic purchasing behaviour The topic is connducted among students studying at Foreign Trade University The sample size is 280 The report contains the following contents: Abstract Introduction CHAPTER I : THEORETICAL BASIS OF THE FACTORS CHAPTER II: MODEL SPECIFICATION CHAPTER III: ESTIMATED MODEL AND STATISTICAL INFERENCE CHAPTER IV: RECOMMENDATIONS AND FURTHER STUDY Conclusion Appendix References Individual assessment During the process of fulfilling this report, due to the limited amount of time aswell as some certain limits in understanding and data collecting, despite all the efforts, the report may hardly avoid mistakes We are looking forward to receiving your comments so that our group can improve and complete this report Many thanks! CHAPTER I: THEORETICAL BASIS OF THE FACTORS Definition 1.1 Consumer buying behavior Consumer buying behavior is a decision process as well as an attitude of the people involved in purchasing and using products Consumers make purchase decisions for buying small as well as large products After recognizing a need or a want, consumers begin searching for products or services that fit their requirements 1.2 Beauty cosmetics products Beauty cosmetics products can be made either natural substances or chemical compounds to enhance both the odor and appearance of the human body Beauty cosmetics products are used to enhance human appearance Today people are more concerned about self-personality and self-consciousness; hence the demand for cosmetic products is increasing rapidly Literature review In the introduction, we have an overview of the importance of studying consumer purchasing behavior in the cosmetics industry But still, more literature reviews are needed to convey the historical background and the current situation of the cosmetics industry, paving the way for understanding the specific context to which the theory of behavior is applied 2.1 Theories related to research 2.1.1 Five stages of consumer buying behavior - Recognition of problem Recognition of a problem starts when a customer realizes a problem or need In all phases of life, humans are considered to be the customers of one company or another And they have requirements and needs which have to be fulfilled at each phase These requirements may be low or high involved ones - Search for information Once a customer identifies a problem, the next step is to adequate enough information to solve the problem The extent of the search for information depends on the customer’s level of involvement in the purchase The major source of information which influences the consumer’s buying behavior are – Advertisements, Friends, Public, commercials, and experience - Evaluation of alternatives The next stage of the consumer decision process is evaluating the alternatives In this stage, the consumer will find the alternatives They will compare and understand what they know about alternative products and brands with what they considered the most - Purchase decision After making a decision whether or not to purchase, a consumer might move through the first decision process as it plans and intends to purchase a particular brand or product - Outcome In this step, after critically analyzing each stage in the decision process, the final purchase is made 2.1.2 Consumer behaviour’s model In order to understand consumers; desires and needs, we must start from their behavioral models Researching consumer behavior models helps businesses realize the different reactions of customers on each product such as quality, price, advertising programs, promotions, models, thereby understanding the needs and tastes of each customer to choose effective business strategies and enhance competitiveness The model depicts the factors stimulating consumers; black boxes and generates reactions The model consists of three basic factors: stimulus, buyer’s black box and the response of buyers Marketing factors (products, prices, place, promotion) and other factors (economic, technological, political, cultural) make impacts on the buyer’s black box (perceive issues, seek information, assess, decide buying behavior) They cause the necessary response from the buyer and result in a definite purchase decision ( brand, quality, price, advertising) In particular, each factor in the model is as follows: - Brand Loyalty A brand is more likely used to introduce a new product to consumers If the brand looks good, it can attract a consumer to use the product Brand loyalty is inextricably related to developing, maintaining and protecting market share In understanding consumer’s behavior, the concept of brand loyalty is important (Wood, 2004) According to Lau, Chang, Moon, and Liu (2006), seven factors influence consumers’ brand loyalty towards certain brands Brand image is used first to introduce a product to a community In other cultures, brand image can come in the form of a human being with nothing else featured whereas, in a collectivistic culture like Malaysia, a brand can represent the quality of the product and trust in a firm (Rahim, 2010) Brand image will determine whether the product is successful or otherwise - Quality The quality product plays a significant role in assessing purchase intention It can be termed as a process of continuous improvement because the product performance and satisfaction of customers will increase due to continuous changes Zeeshan, (2013), states that quality is an important tool for creating a competitive advantage Tariq et al (2013), in his study he argues that Quality should need to be improved every moment Chi et al, (2008) state that purchasing intention of customers depends upon the product quality and it has a significant impact on it Other researchers also found that quality product has a strong impact on customer buying behavior - Price The price is important when a consumer decides to buy a product If the price is affordable, they will buy the product According to Foster and Cadogan CONCLUSION The purpose of this paper is to figure out the attributes that affect the consumer’s purchasing of cosmetic products Through this study, it was identified that the three factors: gender, brand’s reputation, and wage have a great impact on the customer buying decision It could be seen in this study that there is a difference between the usage of cosmetics of men and women, between well-known brand products purchasing and the non-wellknown one It is found that the income level of consumer increases, their expenditures on cosmetics also increases To the extent of purpose and resources, there are still deficiencies in this report, but we look forward to providing readers with a decent view of the overall data set given and the knowledge that we have gained through the Econometrics course We want to say our thanks to Mrs Quynh for providing us useful knowledge and helping, supporting us during the process of doing essays 29 REFERENCES Braun, V and Clarke, V., 2006 Using thematic analysis in psychology Qualitative research in psychology, 3(2), pp.77-101 Brucks, M., 1985 The effects of product class knowledge on information search behavior Journal of consumer research, pp.1-16 D H S Khraim, "The Influence of Brand Loyalty on Cosmetics Buying Behavior of UAE Female Consumers," International Journal of Marketing Studies, vol 3, no 2, pp 123-133, 2011 K L Keller, "Impact of brand-related attributes on purchase intention of customers a study about the customers of Punjab, Pakistan," Interdisciplinary journal of contemporary research in business, vol 4, no 3, 2012 Dhadhal, C H (2011) A Study of Brand Loyalty and it's Effect on Buying Behaviour In Case of Selected Cosmetics Products in the State of Gujarat Saurashtra University Aaker, J.L., 1997 Dimensions of brand personality Journal of marketing research, 34(3), pp.347-356 Ajzen, I., 1991 The theory of planned behavior Organizational behavior and human decision processes, 50(2), pp.179-211 D K T Mrs J Vidhya Jawahar, "Consumer Attitude towards Cosmetic Products," IJEMR, pp 1-7, 2013 30 N Gregory Mankiw, “Principles of Economics”, 6th Edition CFA Curriculum level 1, 2020, Book - Economics 10 Basic Econometrics (Fifth Edition), by DamodarN.Gujarati, Dawn C.Porter 11 Curriculum Book CFA Level I reading 13 The firm and market structures 31 APPENDIX Dataset EXP WAGE GEN BRAND lnEXP 300 2500 1 5.703782475 200 3000 1 5.298317367 500 3000 1 6.214608098 200 2000 5.298317367 300 3000 1 5.703782475 150 3000 5.010635294 500 3000 1 6.214608098 100 2000 0 4.605170186 250 2000 5.521460918 500 2500 1 6.214608098 250 2500 5.521460918 500 2500 1 6.214608098 500 2000 1 6.214608098 600 3000 1 6.396929655 350 2000 1 5.857933154 150 100 300 360 300 550 200 200 300 300 350 600 150 250 400 550 700 500 200 150 280 300 500 550 750 800 350 1500 2000 1500 2000 2500 2500 3500 2000 2000 1800 3000 3500 3000 3000 4000 3000 2500 2500 2000 2000 3000 2000 3600 3000 3000 4500 3000 1 1 1 1 1 1 1 1 1 1 1 1 1 1 0 1 1 1 1 0 1 1 1 5.010635294 4.605170186 5.703782475 5.886104031 5.703782475 6.309918278 5.298317367 5.298317367 5.703782475 5.703782475 5.857933154 6.396929655 5.010635294 5.521460918 5.991464547 6.309918278 6.551080335 6.214608098 5.298317367 5.010635294 5.634789603 5.703782475 6.214608098 6.309918278 6.620073207 6.684611728 5.857933154 32 300 750 250 350 200 600 400 500 200 200 300 350 350 500 300 250 500 750 200 500 150 100 750 200 500 400 250 650 450 200 410 250 300 600 170 600 900 360 650 600 575 450 260 270 200 500 280 400 840 650 300 3000 4000 4000 2500 2000 3500 3500 3500 2500 2000 2500 2700 2500 2500 2000 2000 2000 3000 2800 2500 2700 1000 2600 1700 2300 2500 3000 3300 2000 2800 2900 3400 3500 2500 2000 3000 3600 2500 3000 3500 3200 2000 2500 3600 3200 2700 2400 2500 3100 2500 2900 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 0 1 33 1 1 1 1 1 1 0 1 1 0 0 1 0 1 1 1 1 0 1 0 1 5.703782475 6.620073207 5.521460918 5.857933154 5.298317367 6.396929655 5.991464547 6.214608098 5.298317367 5.298317367 5.703782475 5.857933154 5.857933154 6.214608098 5.703782475 5.521460918 6.214608098 6.620073207 5.298317367 6.214608098 5.010635294 4.605170186 6.620073207 5.298317367 6.214608098 5.991464547 5.521460918 6.476972363 6.109247583 5.298317367 6.01615716 5.521460918 5.703782475 6.396929655 5.135798437 6.396929655 6.802394763 5.886104031 6.476972363 6.396929655 6.354370041 6.109247583 5.560681631 5.598421959 5.298317367 6.214608098 5.634789603 5.991464547 6.733401892 6.476972363 5.703782475 450 400 430 700 500 400 200 450 400 300 300 650 375 550 280 430 500 575 950 700 240 600 700 700 1000 500 600 500 300 200 300 250 250 700 1200 300 250 800 900 650 300 300 400 560 200 850 550 200 200 300 700 3500 2400 2100 3700 3000 2000 2500 2400 2700 3000 3200 4000 4200 4100 3500 3000 3200 4000 4500 3200 3000 4500 6000 4000 7000 3000 4000 3600 6500 2500 3000 2500 1200 4000 7000 3000 3500 5000 4000 3000 3900 4000 7000 2000 1700 2800 3900 1500 2190 3790 2460 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 34 0 1 0 1 1 1 1 1 1 1 1 1 0 1 1 0 1 1 1 0 0 6.109247583 5.991464547 6.063785209 6.551080335 6.214608098 5.991464547 5.298317367 6.109247583 5.991464547 5.703782475 5.703782475 6.476972363 5.926926026 6.309918278 5.634789603 6.063785209 6.214608098 6.354370041 6.856461985 6.551080335 5.480638923 6.396929655 6.551080335 6.551080335 6.907755279 6.214608098 6.396929655 6.214608098 5.703782475 5.298317367 5.703782475 5.521460918 5.521460918 6.551080335 7.090076836 5.703782475 5.521460918 6.684611728 6.802394763 6.476972363 5.703782475 5.703782475 5.991464547 6.327936784 5.298317367 6.745236349 6.309918278 5.298317367 5.298317367 5.703782475 6.551080335 1000 450 2000 680 200 100 250 500 650 300 2000 100 400 150 350 200 200 1050 300 300 800 250 600 550 650 750 450 900 200 750 200 350 500 200 600 600 700 350 550 200 250 100 150 750 600 950 650 340 250 400 700 9640 3800 9650 2545 1750 3700 6580 3900 6500 4130 6670 3600 2260 3970 1355 1980 4450 5530 2300 2450 8650 1500 6500 3700 6500 3500 2000 3200 2000 3600 3000 1500 2000 3900 2500 2400 3600 2800 3500 3600 3500 2200 1800 2600 3800 4700 3500 2600 2600 2300 2400 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 0 1 1 0 35 1 1 1 1 1 1 1 1 1 1 1 1 0 1 1 1 0 1 1 1 6.907755279 6.109247583 7.60090246 6.522092798 5.298317367 4.605170186 5.521460918 6.214608098 6.476972363 5.703782475 7.60090246 4.605170186 5.991464547 5.010635294 5.857933154 5.298317367 5.298317367 6.956545443 5.703782475 5.703782475 6.684611728 5.521460918 6.396929655 6.309918278 6.476972363 6.620073207 6.109247583 6.802394763 5.298317367 6.620073207 5.298317367 5.857933154 6.214608098 5.298317367 6.396929655 6.396929655 6.551080335 5.857933154 6.309918278 5.298317367 5.521460918 4.605170186 5.010635294 6.620073207 6.396929655 6.856461985 6.476972363 5.828945618 5.521460918 5.991464547 6.551080335 600 290 200 650 350 100 600 800 460 600 750 600 150 800 200 250 400 900 250 350 650 200 400 500 550 300 450 500 430 650 290 450 360 560 950 500 365 870 750 950 370 1000 685 770 630 440 590 338 600 400 450 3500 2800 1600 2850 3000 3200 2600 2900 4000 5200 3600 2400 2500 1500 3800 3000 2000 6000 3600 3300 2600 3800 2800 3200 2600 3000 2500 2300 3290 2380 2450 2500 3100 2400 3000 3200 2550 3650 3550 4100 2650 4200 1900 2100 2200 2200 6100 3200 3100 2200 2600 1 1 1 1 1 1 1 1 1 1 1 1 1 0 1 1 1 1 1 1 36 1 1 0 1 1 0 0 1 1 1 1 1 1 0 1 1 1 0 1 0 1 6.396929655 5.669880923 5.298317367 6.476972363 5.857933154 4.605170186 6.396929655 6.684611728 6.131226489 6.396929655 6.620073207 6.396929655 5.010635294 6.684611728 5.298317367 5.521460918 5.991464547 6.802394763 5.521460918 5.857933154 6.476972363 5.298317367 5.991464547 6.214608098 6.309918278 5.703782475 6.109247583 6.214608098 6.063785209 6.476972363 5.669880923 6.109247583 5.886104031 6.327936784 6.856461985 6.214608098 5.899897354 6.768493212 6.620073207 6.856461985 5.913503006 6.907755279 6.529418838 6.646390515 6.445719819 6.086774727 6.380122537 5.823045895 6.396929655 5.991464547 6.109247583 500 720 420 220 190 350 765 320 460 660 360 300 300 360 850 740 800 300 650 750 790 680 420 350 680 250 700 350 620 320 190 430 620 600 3200 3200 3650 2100 2650 2200 3650 2650 3100 3650 2800 2650 3100 2850 3650 2200 3400 1650 1650 4650 3550 3550 2650 2200 2200 2650 3000 2100 3250 2300 2350 2200 2650 2200 1 1 1 1 0 1 1 1 1 1 1 1 1 1 1 1 1 1 0 1 1 1 0 1 1 0 1 STATA estimation results - Perform command sum lnEXP EXP WAGE GEN BRAND 37 6.214608098 6.579251212 6.040254711 5.393627546 5.247024072 5.857933154 6.639875834 5.768320996 6.131226489 6.492239835 5.886104031 5.703782475 5.703782475 5.886104031 6.745236349 6.606650186 6.684611728 5.703782475 6.476972363 6.620073207 6.672032945 6.522092798 6.040254711 5.857933154 6.522092798 5.521460918 6.551080335 5.857933154 6.429719478 5.768320996 5.247024072 6.063785209 6.429719478 6.396929655 Variable lnEXP Obs 280 Mean 6.005637 Std Dev .5494678 EXP WAGE GEN BRAND 280 280 280 280 468.1357 3100.071 8071429 6785714 257.8301 1239.498 3952483 4678611 Min 4.60517 Max 7.600902 100 1000 0 2000 9650 1 Data description - Perform command corr lnEXP WAGE GEN BRAND lnEXP 1.0000 WAGE GEN BRAND lnEXP WAGE GEN BRAND 0.4159 0.2597 0.3422 1.0000 0.1884 0.2726 1.0000 0.2450 1.0000 Correlation matrix between variables - Perform command reg lnEXP WAGE GEN BRAND 38 Source Model Residual Total lnEXP SS df MS Number of obs = 280 F(3, 276) = 30.47 20.9558168 6.98527225 Prob > F = 0.0000 63.2784256 276 229269658 R-squared = 0.2488 Adj R-squared = 0.2406 84.2342423 279 301914847 Root MSE = 47882 Coef Std Err t P>|t| [95% Conf Interval] WAGE 0001461 0000242 6.02 0.000 0000983 0001938 GEN BRAND _cons 2008273 2547604 5.217825 0754521 065065 0908395 2.66 3.92 57.44 0.008 0.000 0.000 0522926 1266737 5.038998 349362 382847 5.396651 Linear regression analysis using Ordinary Least Squares method - Perform command ovtest Ramsey RESET test using powers of the fitted values of lnEXP Ho: model has no omitted variables F(3, 273) = 2.08 Prob > F = 0.1037 Test for misspecification - Perform command imtest, white 39 White's test for Ho: homoskedasticity against Ha: unrestricted heteroskedasticity chi2(7) Prob > chi2 Cameron & Trivedi's = = 8.25 0.3108 decomposition of IM -test Source Heteroskedasticity chi2 8.25 df p 0.3108 Skewness Kurtosis Total 12.47 0.00 20.73 11 0.0059 0.9469 0.0363 Test for heteroscedasticity - Perform command predict res, residuals then sktest res Skewness/Kurtosis tests for Normality joint Variable res Obs Pr(Skewness) Pr(Kurtosis) 280 0.0027 0.8929 adj chi2(2) Test for normal distribution of the disturbance 40 8.37 Prob>chi2 0.0152 .4 Density - Perform command histogram res, normal -1.5 -1 -.5 Residuals Histogram for the normal distribution of the disturbance - Perform command vif Variable VIF 1/VIF BRAND WAGE GEN 1.13 1.10 1.08 0.886777 0.909936 0.923975 Mean VIF 1.10 Test for multicollinearity 41 INDIVIDUAL ASSESSMENT Thành viên Nguyễn Minh Châu Nguyễn Thị Kim Ngân Vũ Phương Thảo Nguyễn Diệu Thương Nguyễn Minh Châu - 10 10 10 Nguyễn Thị Kim Ngân 10 - 10 10 Vũ Phương Thảo 10 10 - 10 Nguyễn Diệu Thương 10 10 10 - Điểm trung bình 10 10 10 10 42 DO-FILE - import excel "/Users/admin/Downloads/Cosmetics.xlsx", sheet("Book 1") cellrange(A1:F653) firstrow - sum lnEXP EXP WAGE GEN BRAND - corr lnEXP WAGE GEN BRAND - reg lnEXP WAGE GEN BRAND - ovtest - imtest, white - predict res, residuals - sktest res - vif - histogram res, normal 43 ... statistical significance of these factors Object and scope of the study: The object of our research are factors influence on the cosmetic purchasing behaviour or the cosmetic purchasing behaviour... information search behavior Journal of consumer research, pp.1-16 D H S Khraim, "The Influence of Brand Loyalty on Cosmetics Buying Behavior of UAE Female Consumers, " International Journal of Marketing... a study on factors influencing consumers purchasing behaviour of natural cosmetics was carried out by Jiali Zhang and Meijuan Zhou (Uppsala Universitet, Sweden) The results showed: consumers
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