Antecedents and consequences of status consumption: avidence from Vietnam

UNIVERSITY OF ECONOMICS HO CHI MINH CITY International School of Business Vo Thi Thu Trang ANTECEDENTS AND CONSEQUENCES OF STATUS CONSUMPTION: EVIDENCE FROM VIETNAM MASTER OF BUSINESS (Honours) Ho Chi Minh City - Year 2014 UNIVERSITY OF ECONOMICS HO CHI MINH CITY International School of Business Vo Thi Thu Trang ANTECEDENTS AND CONSEQUENCES OF STATUS CONSUMPTION: EVIDENCE FROM VIETNAM ID: 22120078 MASTER OF BUSINESS (Honours) SUPERVISOR: Dr NGUYEN THI MAI TRANG Ho Chi Minh City - Year 2014 CONTENTS ABBREVIATION ACKNOWLEDGEMENT ABSTRACT CHAPTER - INTRODUCTION 1.1 Background to the research 1.2 Research problem 1.3 Research objectives 12 1.4 Methodology 13 1.5 Research Structure 13 1.6 Research scope 14 CHAPTER - LITERATURE REVIEW AND HYPOTHESES 15 2.1 Literature review 15 2.1.1 Collectivism and Individualism 15 2.1.2 Materialism 17 2.1.3 Status Consumption 18 2.1.4 Life satisfaction 19 2.2 Research hypotheses 19 2.3 Conceptual model 23 2.4 Summary 24 CHAPTER - METHODOLOGY 25 3.1 Research design 25 3.1.1 Research process 25 3.1.2 Measurement scales 26 Page | 3.2 Measurement refinement 29 3.3 The quantitative study 30 3.3.1 Sampling and data collection 30 3.3.2 Data analysis 30 3.4 Summary 30 CHAPTER - DATA ANALYSIS AND RESULTS 32 4.1 Data collection 32 4.2 Respondents’ demographics 32 4.3 Descriptive statistic 34 4.4 Confirmatory factor analysis (CFA) 34 4.4.1 CFA for the first-order constructs 35 4.4.2 CFA for second-order construct 39 4.4.3 CFA for the final measurement model 40 4.5 Structural equation modeling (SEM) 44 4.6 Bootstrap method 47 4.7 Discussion 48 4.8 Summary 53 CHAPTER CONCLUSION, IMPLICATIONS, AND LIMITATION 55 5.1 Conclusions about hypotheses and research problem 56 5.2 Implications for theory and managerial implications 60 5.3 Limitations and further research 62 REFERENCES 64 APPENDICES 69 Page | LIST OF FIGURES Figure 1.1 Population Pyramid of Vietnam 11 Figure 2.1 Conceptual model 23 Figure 3.1 Research process 26 Figure 4.1 CFA model of collectivism 36 Figure 4.2 CFA model of individualism 36 Figure 4.3 CFA model of life satisfaction 37 Figure 4.4 CFA model of status consumption 37 Figure 4.5 CFA model of materialism 39 Figure 4.6 Final measurement model 43 Figure 4.7 Structural results (standardized estimates) 45 LIST OF TABLES Table 4.1 Source of data collection 32 Table 4.2 Respondents’ characteristics 33 Table 4.3 Descriptive statistic: Eliminated items 34 Table 4.4 Summarized of pvc and pc (first order constructs) 38 Table 4.5 Summarized of pvc and pc (second order construct) 40 Table 4.6 Correlations (of Materialism) 40 Table 4.7 Summary of pvc and pc (final measurement model) 41 Table 4.8 Correlations (final measurement model) 42 Table 4.9 CFA Summary of eliminated item 42 Table 4.10 Unstandardized structural paths 44 Table 4.11 Measurement validation 46 Table 4.12 Regression Weights (bootstrap standard errors) 47 Table 4.13 Removed items 53 Page | LIST OF APPENDICES Appendix A List of in-depth interviews’ participants 69 Appendix B In-depth Interview’ refinement measurement scale 69 Appendix C Questionnaire (English Version) 73 Appendix D Questionnaire (Vietnamese Version) 78 Appendix E Descriptive statistics 83 Appendix F Summarized results of Confirmatory factor analysis 84 Appendix G Standardized Regression Weights (Final measurement model) 89 Appendix H Final measurement scales 90 Page | ABBREVIATION CIEM Central Institute for Economic Management CFA Confirmatory Factor Analysis GDP Gross Domestic Product GSO General statistics Office of Vietnam LS Life satisfaction MAT Materialism MOIT Ministry of industry and trade of the socialist republic of Vietnam MVS Material values scale RS Gross retail sales of goods and services SC Status consumption SEM Structural equation modeling SPSS Statistical Package for the Social Sciences TE Transitional economy VAMA Vietnam Automobile Manufacturers' Association Page | ACKNOWLEDGEMENT At first, I would like to express my deep gratitude to my supervisor Dr Nguyen Thi Mai Trang for her professional guidance, dedicated support, valuable suggestions, instructions, and encouragements during the time of doing my research Secondly, I would like to express my appreciation to Prof Nguyen Dong Phong, Prof Nguyen Dinh Tho, Dr Tran Ha Minh Quan, Dr Nguyen Phong Nguyen, and Dr Tran Phuong Thao for their valuable time as the members of the ISB research committee Their comments and meaningful suggestions are significantly contributed to this research completion Finally yet importantly, my sincere thanks are given to all of my teachers at International Business School – University of Economics Ho Chi Minh City for their teaching and guidance during my Master course Page | ABSTRACT In the Vietnam context after Doimoi, Vietnam was one of the TEs nations strongly affected by culture transitions, young population, economic and population growth The author uses research methods in marketing with an expectation of at first, investigating the influence of following factors: collectivism, individualism, and materialism on the consumption behavior – status consumption and the life satisfaction; secondly, strengthening evidence in Vietnam; thirdly, pointing out useful practical and managerial implications, which support the nation and enterprises to understand consumers’ needs Using the data collection of 427 respondents, the author found that life satisfaction is motivated by status consumption, which is motivated by collectivism, individualism, and materialism Furthermore, the results indicated that collectivism and individualism have a positive influence on materialism and coexist in Vietnamese consumers These findings suggest that the companies should carefully consider the culture elements of their products or services, in order to segment the customers and to plan an adequate strategy Besides, the policy markers should state out the policies, which based on the real demand of status consumption in Vietnam market, in order to increase the life satisfaction of their citizens Key words: status consumption, collectivism, individualism, materialism, life satisfaction Page | CHAPTER - INTRODUCTION 1.1 Background to the research From Doimoi (Economic Renovation) policy of government in 1986, the new components of economy have formed Hence, the role of organizations and individuals in providing goods and service is continuously developing The open-door policy attracts huge amount of investment from another developed country (Central Institute for Economic Management, 2012) The new economic reformation in Vietnam has dramatically changed the retailing industry A retail sale of goods and services is an important indicator of GDP and is the motivation of Vietnam economy This indicator also reflects the consumption capability of domestic customers Along with economic reformation, in 2008, Vietnam became a lower-middle-income economy and retail sales index rapidly grew up from 0.7 bill VND in 1985 to 2325 bill VND in 2012 (General Statistic Office of Vietnam, 2012) Total retailed sales of consumer goods and services in the first nine months of 2014 rose by 11.1% from the same period in 2013 If the factor of inflation was excluded, it would be 6.2% Totally, retailed sales of goods went up by 10.7%, accommodation and catering services by 11.9%, traveling service by 17.4% (General Statistic Office of Vietnam, 2014) and other services by 12.5% This was resulted from many factors, such as the increase in population (up to 1% per year), the young population of "golden age", the growing proportion of middle class, government open-door policies, the increasing of foreign investments, and social exchange resulting in social-psychology shift on consumer values, attitudes and behaviors (Phương Dung, 2013) In depth, some of these change values are materialism, self-perception (individualistic self and collectivistic self), sense of life satisfaction, and status consumption Many studies, which are related to materialism, have been investigated all over the world, essentially the relationship between materialism and consumption behavior; the differences of materialism either between collectivistic culture and individualistic culture; or between various demographic variables (age, gender, generation, etc.) (Flynn et al., 2013; Otero-Lopez et al., 2011; Olivia et al., 2012; Sharma, 2011…) Among consumption behaviors, previous studies explore the impact of materialism on compulsive consumption Page | 28 I prefer to be straightforward when dealing with people I have just met 29 I enjoy being unique and different from others in many respects 30 Speaking up in public is not a problem for me 31 Being able to take care of myself is a primary concern for me 32 My personal identity independent of others is very important to me 33 Without competition, it is not possible to have a good society 34 I enjoy working in situations involving competition with others Life satisfaction 35 Generally, I’m satisfied with my life as a whole 36 Generally, I’m satisfied with my family life 37 Generally, I’m satisfied with my relationships with friends 38 Generally, I’m satisfied with my standard of living 39 In general, I can say I have a good life III Section C – Background information This section of the questionnaire refers to background or biographical information The information will allow me to classify and compare groups of respondents Gender Male; Female Age group in years 18 – 23; 24 – 30; 31 – 40; 41 – 50; > 51 Income (I) per month (1,000,000vnd / month) I < > < > < > < > MatCen MatHap MatHap e13 e14 e10 e21 e18 e8 e9 e8 e11 Estimate 853 627 852 -.154 -.129 -.216 275 188 135 210 -.247 -.269 Table F.5.3 Standardized Regression Weights MatSucc5 MatSucc4 MatSucc3 MatSucc2 MatSucc1 MatCen4 MatCen3 MatCen2 MatCen1 MatHap5 MatHap4 MatHap3 MatHap2 MatHap1  MatSucc  MatSucc  MatSucc  MatSucc  MatSucc  MatCen  MatCen  MatCen  MatCen  MatHap  MatHap  MatHap  MatHap  MatHap Estimate 723 620 648 603 714 584 579 542 548 741 715 728 700 632 Page | 87 Table F.6 Standardized Regression Weights MatCen MatHap MatSuc Col6 Col5 Col4 Ind7 Ind6 Ind5 StatusC5 StatusC4 StatusC3 StatusC2 StatusC1 LifeS5 LifeS4 LifeS3 LifeS2 LifeS1 MatCen4 MatCen3 MatCen2 MatSucc5 MatSucc4 MatSucc3 MatSucc2 MatSucc1 MatHap5 MatHap4 MatHap3 MatHap2 MatHap1  MAT  MAT  MAT  COL  COL  COL  IND  IND  IND  StatusC  StatusC  StatusC  StatusC  StatusC  LifeS  LifeS  LifeS  LifeS  LifeS  MatCen  MatCen  MatCen  MatSuc  MatSuc  MatSuc  MatSuc  MatSuc  MatHap  MatHap  MatHap  MatHap  MatHap Estimate 1.125 760 863 577 806 534 838 623 438 689 649 742 566 571 745 720 627 782 838 547 569 494 670 626 639 606 666 762 743 706 689 595 Page | 88 Appendix G Standardized Regression Weights (Final measurement model) Estimate  Col6 COL 570  Col5 COL 814  Col4 COL 528  Col3 COL 701  MatSucc4 SUC 605  MatSucc3 SUC 671  MatSucc2 SUC 659  MatSucc1 SUC 716  Ind2 UNI 622  MatHap5 HAP 728  MatHap4 HAP 738  MatHap3 HAP 722  MatHap2 HAP 687  MatHap1 HAP 620  StatusC1 SC 696  StatusC2 SC 700  StatusC3 SC 629  StatusC4 SC 547  LifeS5 LS 766  LifeS4 LS 746  LifeS3 LS 619  LifeS2 LS 782  LifeS1 LS 824  MatCen2 SUC 616  MatCen4 HAP 631  Ind5 UNI 853  Ind6 COM 626  Ind7 COM 838 Page | 89 Appendix H Final measurement scales Collectivism No of items 04 Individualism 03 Success (Materialism) 05 Centrality (Materialism) 04 Happiness (Materialism) 05 Status consumption 05 Life satisfaction 05 Total 31 Measure scale Name of items Col3: I will sacrifice my self-interest for the benefit of the group I am in Col4: I often have the feeling that my relationships with others are more important than my own accomplishments Col5: It is important to me to respect decisions made by the group Col6: I will stay in a group if they need me, even when I am not happy with the group Ind5: My personal identity independent of others is very important to me Ind6: Without competition, it is not possible to have a good society Ind7: I enjoy working in situations involving competition with others MatSuc1: Some of the most important achievements in life include acquiring material possessions MatSuc2: I admire people who own expensive homes, luxury cars, and branded clothes MatSuc3: I consider that the amount of material objects people own is a sign of success MatSuc4: The things I own say a lot, about my endeavor in life MatSuc5: I like to own things that attract people MatCen1: I usually concern about acquisition possessions in life MatCen2: The things I own are all that important to me MatCen3: Purchasing things give me a lot of pleasure MatCen4: I like a lot of luxury in my life MatHap1: I have not had all the things I really need to enjoy life MatHap2: I would be happier if I owned nicer things MatHap3: It sometimes bothers me quite a bit that I cannot afford to buy all the things I would like MatHap4: My life would be better if I owned certain things I not have MatHap5: I would be happier if I could afford to buy more things StatusC1: I would buy a product based on their status StatusC2: I am interested in new products with status StatusC3: I would pay more for a product if it had status StatusC4: The status of a product reflects my personality StatusC5: A product is more valuable to me if it has some snob appeal LifeS1: Generally, I’m satisfied with my life as a whole LifeS2: Generally, I’m satisfied with my family life LifeS3: Generally, I’m satisfied with my relationships with friends LifeS4: Generally, I’m satisfied with my standard of living LifeS5: In general, I can say I have a good life