Willingness to buy organic vegetable , a study in bien hoa city

UNIVERSITY OF ECONOMICS HO CHI MINH CITY International School of Business - Nguyen Thanh Phuong CONSUMER WILLINGNESS TO PURCHASE ORGANIC VEGETABLE: A STUDY IN BIEN HOA CITY MASTER OF BUSINESS (Honours) Ho Chi Minh City – Year 2014 UNIVERSITY OF ECONOMICS HO CHI MINH CITY International School of Business - Nguyen Thanh Phuong CONSUMER WILLINGNESS TO PURCHASE ORGANIC VEGETABLE: A STUDY IN BIEN HOA CITY ID: 22120024 MASTER OF BUSINESS (Honours) SUPERVISOR: DR LE NGUYEN HAU Ho Chi Minh City – Year 2014 ABSTRACT Organic vegetables were produced with the majority of the projects directed towards export, but in recent years, the demand of organic vegetables in domestic market is increasing, driven by consumer higher standard of requirements, safety and quality focus and concerns over excessive chemical synthetics use in conventional vegetable production Vietnamese households are more willing to pay a premium for organic vegetable Advantages of organic vegetable are indicated as good for health, more tasty for users while disadvantages are not easy to buy and not enough species for choices Given both the motives and barriers of purchasing organic vegetable, the study aims to identify the most influence factors that affect consumers’ willingness to purchase towards organic vegetables in Vietnam, precisely in Bien Hoa City Besides the demographic characteristics of consumers such as age, educational level, monthly expense for food, presence of children in the family, that affect their willingness to purchase organic vegetable , the author has presented a model with number of items and factors proven to add explanation value concerning willingness to purchase organic vegetable of Bien Hoa consumers Field interviews conducted in a random selected sample consisted of 230 family food buyers in August and September of 2014, through a selfadministered structured questionnaire Frequencies, descriptive statistics, principal components analysis and multiple regression were used for data analysis to identify factors that affect people in preferring consuming organic vegetables The results revealed three factors having most influence on consumers’ willingness to buy organic vegetables: (1) Price, (2) Awareness of Benefits and (3) Subjective Norms While (2) Awareness of Benefits and (3) Subjective Norms were indicated as buying motives, (1) Price was indicated as buying barriers TALE OF CONTENTS ABSTRACT CHAPTER INTRODUCTION .5 1.1 Background 1.2 Problem statement 1.3 Research objectives and aims 1.4 Thesis structure .7 CHAPTER LITERATURE REVIEW 2.1 Theoretical review: Theory of Planned Behavior 2.2 Buying motives and buying barriers of organic vegetable 10 2.3 Research hypothesis and research model 12 2.3.1 Self-awareness 13 2.3.2 Health Concerns 14 2.3.3 Subjective Norms 14 2.3.4 Perceived Benefits 15 2.3.5 Perceived Convenience 15 2.3.6 Perceived Price .16 CHAPTER RESEARCH METHOD 17 3.1 Research method 17 3.2 Measurement scale 18 3.3 Data collection method .20 3.4 Data analysis method 20 CHAPTER RESULTS & DISCUSSIONS 21 4.1 Profile of respondents 21 4.2 Scale validity and reliability 25 4.3 Exploratory Factor Analysis (EFA) 28 4.4 Adjusted Research Model 31 4.4.1 Awareness of benefits .32 4.4.2 Subjective Norms 33 4.5 Testing the hypotheses 34 4.5.1 Regression (Dependent variable: Willingness to Purchase) 36 4.5.2 Regression (Dependent variable: Awareness of Benefits) 37 4.5.3 Testing hypotheses results 38 CHAPTER CONCLUSIONS AND LIMITATIONS 43 5.1 Summary of research 43 5.2 Limitations 45 5.3 Suggestion for further researches 46 REFERENCES 47 APPENDIX 53 a Survey Questionnaire .53 b PP Plot and Scatterplot for Dependent Variable Willingness 55 c PP Plot and Scatterplot for Dependent Variable Awareness of Benefits .56 LIST OF TABLES Table 3.1 Summary of scales used in survey questionnaire 18 Table 4.1 Respondent Demographic 22 Table 4.2 Age range * Using organic vegetable frequency .24 Table 4.3 EFA for individual scales 25 Table 4.4 Cronbach's alpha index 27 Table 4.5 EFA rotated component matrix - 1st 29 Table 4.6 EFA rotated component matrix - 2nd 30 Table 4.7 Factor Awareness of benefits .31 Table 4.8 Multiple Regression Analysis Model .35 Table 4.9 Pearson Correlation 35 Table 4.10 Willingness to Purchase Multiple Regression 36 Table 4.11 Awareness of Benefits Multiple Regression 37 LIST OF FIGURES Figure 2.1 Theory of Planned Behavior .10 Figure 2.2 Beliefs connected to organic food 11 Figure 2.3 Research model 13 Figure 4.1 Using organic vegetable frequency 23 Figure 4.2 Relationship between organic vegetable using and number of children in the family and family food purchaser educational level 24 Figure 4.3 Adjusted research model 32 Figure 4.4 Awareness of Benefits combining 33 Figure 4.5 Multiple regression method results 38 CHAPTER 1.1 INTRODUCTION Background Vietnam weather condition is favorable to grow various kinds of vegetable in all seasons However, as the farmers focus too much on productivity, intensive cultivation, and increasing crops, they tend to fertilize plants and use insecticides, pesticides, growth stimulants indiscriminately According to the report of Mr Nguyen Xuan Hong, Director General of Plant Protection Department, 80% of plant protection chemicals were used in the wrong way and Vietnamese farmers could reduce 50% amount of plant protection chemicals using without any affect to productivity (MARD, 2014) Not only environment pollution, time and money extravagance, the overuse of plant protection chemicals also cause food poisons and many diseases to human such as cancer, kidney dysfunction, toxicity to the nervous system, etc As a result, the safety of vegetable is a key issue in Vietnam and becomes an objective of Foot Safety National Strategic Programme: “To 2015, 30% planting farms would have applied VietGAP” (MOF, 2011) Vegetables are considered as safe when the nitrate and heavy metals, pesticide, and microbial contamination levels are below the standard level which is issued by the MARD (2008) Nowadays, people get used to the term “Organic Vegetable” Organic vegetable is vegetable grown and processed by methods that not use any synthetic materials, such as chemical pesticide, synthetic fertilizer and growth stimulants (FAO, 1999) More and more companies invest in organic food business such as An Hòa Co., Organic Farm, Golden Garden, Nông nghiệp GAP, Ánh Ban Mai, Homefood, Mr.Sạch, Tràng An, Bác Tôm, Organica, Organic Roots, etc According to Ms Regina Loo – Marketing Director at Big C Vietnam in 2014, not only the increasing awareness on health, food safety and environmental concerns that cause an increase in demand for organic foods, the income per capita in Vietnam getting higher is also a reason There is a rise in the number of households who choose organic vegetables for their meals They are willing to pay a premium for organic vegetables 1.2 Problem statement However, the increasing demand of organic vegetable does not guarantee a promising market for organic vegetables Preliminary observations revealed that high price is the first disadvantage For example, according to State Management Information of Price and Valuation, in Feb 2014, the price of Cabbage (“Bap Cai”) in traditional market is around 12,000-15,000 VND/KG, while it is 25,000-30,000 VND/KG for organic vegetable, two times more expensive, while buyers are not sure that the higher price one is really safe On other hand, limited supply caused by high cost cultivating as well as limited products availability and variability, customers cannot buy their favorite organic vegetable at the most convenience (Trinh, 2014) Those disadvantages make the demand of organic vegetable still low against rising demand Given this situation, the problem of concerns by managers and marketers in related organizations is how to increase the acceptance of Vietnamese consumers towards organic vegetable Thus, it is necessary to identify the key factors and measuring their influence on the willingness to buy organic vegetables This helps to clarify the buying motives and buying barriers, improve knowledge and understanding to draw managerial implications Previous studies mainly focus on consumers awareness towards organic vegetables with research objectives are local Vietnamese in general (Truong et al., 2012; Mergenthaler et al., 2009) Then, the results might not reflect the true image of organic vegetable consumption and it is difficult to understand how willingness to purchase organic vegetable are affected by changes of other indicators such as price, convenience, consumption trend, etc Bien Hoa City, Dong Nai Province is selected as a case to test the model The city is only 30 kilometers away from Ho Chi Minh City Center, growing fast in recent years with new food stores, malls, supermarkets appeared The research will assess the level of family food buyers’ awareness of health, trust and perception of certificated organic vegetable, price consciousness and buying convenience influence on willingness to buy organic vegetable in Bien Hoa City The findings can benefit organic vegetable sellers and retailers in developing appropriate sales and marketing strategies by improving understanding of potential Vietnamese consumers – the family food purchaser It may also help government to design strategies for consumer education on the benefits of going organic 1.3 Research objectives and aims The proposed model will be tested in the context of Vietnam, Bien Hoa City specifically As problems stated above, the research objectives are indicated as to identify the key factors and measure their influence on consumers’ willingness to buy organic vegetable Its aim is to guide future awareness raising, advocacy and marketing activities of the organic sector in Viet Nam 1.4 Thesis structure The structure of this research is organized in five chapters  Chapter is concerned with the introduction of the thesis which includes research background, research problems and research objectives  Chapter reviews relevant literature regarding the Theory of Planned Behavior of Icek Ajzen and preliminary researches in organic vegetable Through the discussion, the hypotheses and research model will be developed for the testing which is mention in the next chapter  Chapter introduces the design of the research This chapter starts with research validity and reliability and goes to stage of data collection in assessing the perception and awareness of consumers as well as measuring the influence of the main factors on their willingness to purchase organic vegetable The discussion on research population, research sample, data collection procedure and regression model for testing hypotheses are also included in this chapter  Chapter shows the strategy of data analysis and discusses the findings This chapter will provide a summary of testing results for hypotheses given in the chapter  Chapter relates to the conclusions, implications and limitation Suggestions of further research are also mentioned in this chapter Perceived Convenience: Most consumers had negative attitude toward Convenience when buying organic vegetable 163 and 191 interviewees (out of 202) stated that organic vegetable was not easy to buy and not enough species for choices, respectively Hence, the variable Convenience appeared not to attribute to explain consumers’ Willingness to Purchase organic vegetable In fact, increase the Convenience of buying and using organic vegetable may increase the consumers’ Willingness to Purchase Once again, the R&D should be focused to find the best way to store and reserve as organic vegetables don't last long since they not contain preservatives This can help organic vegetable to be more widely distributed, improve its current limited availability 42 CHAPTER 5.1 CONCLUSIONS AND LIMITATIONS Summary of research Organic vegetable must be made available since consumers’ concerns on food safety, quality and nutrition increases, this will be expected to lead to an increase in demand yet there seems to be a gap in the Vietnamese market where many key informants are of the view that price and availability is a serious issue – the price is high and there are not enough suppliers and the few who are there are not reliable That affects the consumers’ Willingness to Purchase and lower organic vegetable consumption This is the most concerns of organic vegetable organizations’ managers and marketers To solve the problem of concerns, a study was undertaken with the main purpose is identifying the main factors that affect the consumers’ Willingness to Purchase organic vegetable Demographic characteristics such as age, educational level, monthly expense for food, presence of children in the family would affect the willingness to purchase organic vegetable Particularly, family food purchaser with high age, educational level and monthly expense for food were more likely to buy organic vegetables, reflect their awareness of health and affordability Research also showed presence of children in family positively influences the organic food purchase Furthermore, to add explanation value in studies concerning willingness to purchase organic vegetable of Bien Hoa consumers, based on the framework of Theory of Planned Behavior, the author had proposed a model with six factors: Health Concerns, Subjective Norms, Self-Awareness, Perceived Benefits, Perceived Price and Perceived Convenience However, based on the data analysis, only four factors resulted having significant influence on Willingness to Purchase: Health Concerns, Subjective Norms, Awareness of Benefits (combination of Self-Awareness and Benefits) and Perceived Price 43 Perceived Price is the most important consideration when shopping Although organic vegetables present very attractive benefits of consumption, they are significantly more expensive than non-organic and most who consume them are middle to upper class persons as the majority belong to the lower social classes and cannot afford organic vegetable daily More than 70% interviewees stated that organic vegetable was expensive, hence price need to be perceived as affordable in order to increase Willingness to Purchase of consumers Awareness of Benefits played the important role determining Willingness to Purchase The higher the awareness’, the consumers are more likely to purchase organic vegetable rather than non-organic Therefore, consumers really need to be educated and exposed to the benefits of organic products for consumption levels to grow Also, to build trust on consumers, the organic vegetable verifying system need to be improved such as standards, mark, verification and control The companies have to supply sufficient information about how organic procedures are ensured in growing, processing and even delivery stage Subjective Norms resulted in influencing both consumers’ Awareness of Benefits and Willingness to Purchase, hence it should be an effective communication mean to the market and especially on young people and children to carry the organic idea into the future The most popular norms about organic foods is word of mouth and teachings at school or college Other popular norms included television programs or adverts and radio programs or adverts Health Concerns were supported to have significant impact on consumers’ Willingness to Purchase via Aware of Benefits From the survey, most family food buyer were female, as such, did have positive concerns of health and food safety Most people know or understand much about what organic vegetable are, but not ask specifically for organic vegetable As such, it pointed out the gap between positive Awareness towards purchasing behavior and Willingness to Purchase organic vegetable 44 Farmers, traders, organizations and government should come together to negotiate equivalencies of the going organic strategy, promote the above factors which in turn influence positively to consumers’ Willingness to Purchase The main reasons for starting this process are meeting consumer expectations, preventing fraud and adapting the legislation to the fast-growing sector and market To conclude, the author recommends that researchers and manufacturers and suppliers in the organic sector would focus on the importance of reasonable price and affective attitude to increase willingness to organic vegetable consumption 5.2 Limitations Due to limited of time as well as the author skills and knowledge, this study has a number of limitations:  Firstly, EFA should be conducted for all scales, including independent and dependent variables  Secondly, the numbers of items in a scale were rather few Therefore, when using EFA, some items were eliminated from the model and caused combination of factors Perceived Benefits and Self-awareness, which may affect the quality of the research  Thirdly, adjusted R squared of 0.64 was acceptable, but as only explained 64% variation of Willingness, more research should be done to examine if there were other factors influence the consumers’ Willingness to Purchase organic vegetables rather than those factors mentioned above  The fourth limitation belonged to the questionnaire design As the questionnaire contained many items, the author should have used the 7-point scale or more to avoid similarity and combining items among factors  Finally, another limitation in data collection was the heteroscedasticity, which could lead to bias in test statistics and confidence intervals 45 5.3 Suggestion for further researches As the study tested the factors that applied to Willingness to Purchase organic vegetables in Bien Hoa only, conducting a similar study in other sectors, industries or areas may not achieve the similar results Therefore, further research should be done to broaden the scope of this study and/or to include other constructs relating to willingness to purchase organic products to capture more comprehensive 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Tri Thuc Tre Magazine 101, 14-16 52 APPENDIX a Survey Questionnaire BẢNG CÂU HỎI KHẢO SÁT Nghiên cứu số: Khu vực: _ Thời điểm nghiên cứu giờ, ngày / / _ Phần giới thiệu Xin chào anh/chị, Nguyễn Thanh Phương, học viên cao học trường đại học Kinh tế TP HCM Hiện thực đề tài nghiên cứu “Thái độ việc mua sử dụng rau hữu hộ gia đình” thành phố Biên Hịa (tỉnh Đồng Nai) Kết khảo sát giúp doanh nghiệp cấp quản lý nhà nước hiểu rõ người tiêu dùng, qua có biện pháp sách phù hợp, cải thiện việc sản xuất phân phối rau hữu cơ, đảm bảo an toàn sức khỏe cho người tiêu dùng Lưu ý: Rau hữu rau canh tác điều kiện hoàn toàn tự nhiên: khơng bón phân hóa học, khơng phun thuốc bảo vệ thực vật, khơng phun thuốc kích thích sinh trưởng, không sử dụng thuốc diệt cỏ không sử dụng sản phẩm biến đổi gen (phương pháp canh tác hữu cơ) Phần gạn lọc S1 Nơi gia đình Anh/chị: □ Biên Hịa  Tiếp tục □ Khác  Ngưng S2 Anh/chị có phải người chịu trách nhiệm cho việc mua sắm thực phẩm gia đình khơng? □ Phải  Tiếp tục □ Khơng phải  Ngưng Phần chính: Anh/ chị vui lịng cho biết mức độ đồng ý Anh/chị phát biểu sau theo mức đánh giá từ hoàn tồn khơng đồng ý đến hồn tồn đồng ý Hồn tồn khơng đồng ý (Health01) Anh/chị thường xun quan tâm sức khỏe thân (Health02) Anh/chị thích tìm hiểu thông tin sức khỏe (Health03) Anh chị chấm dứt sử dụng sản phẩm anh chị biết có hại cho sức khỏe (SuNorm04) Anh/chị mua Rau hữu thấy người xung quanh dùng (đồng nghiệp/ bạn bè) (SuNorm05) Anh/chị mua Rau hữu bác sĩ khuyên Rau hữu tốt cho sức khỏe (SuNorm06) Người thân/ bạn bè khuyên Rau hữu tốt cho sức khỏe Anh/chị (SuNorm07) Tiêu dùng Rau hữu xu hướng đại (SuNorm08) Anh/chị mua Rau hữu tivi/ báo chí cảnh báo nhiều loại rau có dư lượng chất hóa học (Aware09) Anh/chị tin Rau hữu không chứa chất hóa học gây bệnh (Aware10) Anh/chị tin Rau hữu giúp anh chị ngăn ngừa 53 3 Hoàn toàn đồng ý 5 5 5 5 5 số bệnh (Aware11) Anh/chị cho sử dụng Rau hữu tốt cho sức khỏe (Aware12) Sử dụng rau hữu giúp anh/chị cảm thấy an tâm (Benefit13) Anh/chị nhận thấy rau hữu có vị ngon loại rau thơng thường (Benefit14) Anh/chị cho rau hữu có giá trị dinh dưỡng cao rau thông thường (Benefit15) Anh/chị cho rau hữu loại rau thân thiện với mơi trường (Conven16) Anh/chị dễ dàng tìm mua Rau hữu (Conven17) Rau hữu có đủ chủng loại Anh/chị cần (Conven18) Sử dụng Rau hữu giúp Anh/chị tốn thời gian rửa so với rau thường (Price19) Anh/chị nhận thấy giá bán Rau hữu cao so với rau thông thường (Price20) Giá bán Rau hữu rẻ (Price21) Giá bán Rau hữu xứng đáng với lợi ích mang lại (Willing22) Anh/chị chắn mua sử dụng rau hữu (Willing23) Anh/chị sử dụng rau an toàn với hàm lượng chất hóa học định giá thấp (Willing24) Anh/chị mua rau thông thường chợ (Willing25) Anh/chị định mua rau mà khơng quan tâm rau hữu hay thơng thường (Willing26) Anh/chị giới thiệu rau hữu cho người thân, bạn bè sử dụng 5 5 1 2 3 4 5 5 1 2 3 4 5 5 5 Phần câu hỏi phụ: Xin anh/chị vui lịng cho biết số thơng tin cá nhân khác để tổng hợp liệu nghiên cứu (gioitinh) Giới tính: □ (1) Nam □ (2) Nữ (nhomtuoi) Nhóm tuổi □ (1) Dười 20 tuổi □ (2) 21-30 tuổi □ (3) 31-40 tuổi □ (4) 41-50 tuổi □ (5) Trên 50 tuổi (trenho) Gia đình anh chị có trẻ nhỏ (