Factors influencing consumers’ intention to repurchase organic cosmetics

VIETNAM NATIONAL UNIVERSITY, HANOI VIETNAM JAPAN UNIVERSITY PHAN THI DINH FACTORS INFLUENCING CONSUMERS’ INTENTION TO REPURCHASE ORGANIC COSMETICS MASTER'S THESIS VIETNAM NATIONAL UNIVERSITY, HANOI VIETNAM JAPAN UNIVERSITY PHAN THI DINH FACTORS INFLUENCING CONSUMERS’ INTENTION TO REPURCHASE ORGANIC COSMETICS MAJOR: BUSINESS ADMINISTRATION CODE: 8340101.01 RESEARCH SUPERVISOR: PROF DR MOTONARI TANABU DR DO XUAN TRUONG Hanoi, 2021 ACKNOWLEDGEMENT First and foremost, I would like to express my sincere gratitude to everyone in the MBA program of Vietnam Japan University for providing me with the opportunity to become a student of VJU and helping us a lot in the two-year journey Especially, I want to express the warmest thanks to my Vietnamese and Japanese professors, Dr Do Xuan Truong and Prof Dr Motonari Tanabu who gave me useful guidelines and orientation to finish my thesis Their advice has helped me improve my skills and knowledge related to problem logic thinking, synthesizing research, or analyzing data These experiences will be very valuable for me not only for my thesis but also for other issues in work and study Moreover, during my master research, I received a lot of enthusiastic encouragement and support from family, friends, colleagues to overcome difficulties and achieve my goals Last but not least, the two-year study period was really not easy for me, I want to express my deepest thanks to the support from Vietnam Japan University, Yokohama National University, VJU officers, YNU IPO staffs, all Professors and kindly classmate Thank you Author Phan Thi Dinh ABSTRACT Purpose of the study: In recent years, consumer demand for organic and natural cosmetic products is increasing all over the world and especially in Vietnamese market This has created potential development opportunities for companies in the cosmetics sector However, this also creates a challenge for businesses in not only attracting new customers, but also maintaining customers who continue to be interested and ready to buy their products again in the future Maintaining customer repurchase intention will be a strategy for cost-effectiveness and increasing the competitive advantage of the company My research aims to identify factors and their influences degree to repurchase intention towards organic cosmetics Particularly, this research will investigate the effect and understand the relationship between health consciousness, environmental consciousness, safety value, familiarity, expertise, attitude, and repurchase intention in organic cosmetics at Vietnamese market Research Methodology/Design: A quantitative research is implemented using an online and offline survey in order to collect primary data for hypothesis testing After collecting data from 150 respondents, SPSS and Smart-PLS 3.0 software are used to analyze data Findings: The findings indicated the significant positive effects from health consciousness, and safety value on attitude and the significant influence of environmental consciousness, attitude, familiarity, and expertise on repurchase intention organic cosmetics The analyses also found that that among three antecedents of repurchase intention, familiarity has the most substantial impact Research Limitations: The main limitation of this research is excluding other important factors that impact repurchase intention such as price, customer satisfaction, etc Contribution: The study provides knowledge related to the factors which influence intention to repurchase of consumer towards organic cosmetics in Vietnamese market Keywords: Consumer’s repurchase intention, health consciousness, environmental consciousness, safety value, attitude, familiarity, expertise TABLE OF CONTENTS ACKNOWLEDGEMENT ABSTRACT LIST OF TABLES i LIST OF FIGURES ii LIST OF ABBREVATIONS iii CHAPTER 1: INTRODUCTION .1 1.1 Research background 1.2 Research objectives 1.3 Subject and scope of the research 1.4 Structure of the research CHAPTER 2: LITERATURE REVIEW 2.1 Organic cosmetics 2.2 Repurchase intention 2.3 Theory or Planned Behavior 2.3.1 Attitude 10 2.4 Health Consciousness 11 2.5 Environmental Consciousness 12 2.6 Safety Value .13 2.7 Familiarity 14 2.8 Expertise .15 2.9 Proposed research model 16 CHAPTER 3: METHODOLOGY 18 3.1 Research process 18 3.2 Research design 19 3.2.1 Instrument Development 19 3.2.2 Sample and Data collection .21 3.2 Analysis procedure 23 CHAPTER 4: DATA ANALYSIS 25 4.1 Descriptive analysis 25 4.2 PLS-SEM model assessment 28 4.3 Structural model assessment .31 CHAPTER 5: DISCUSSION AND CONCLUSION .35 5.1 Discussion 35 5.2 Implications 37 5.2.1 Theorical implications 37 5.2.2 Practical implication .38 5.3 Limitations and future research recommendations 40 REFERENCES 42 APPENDIX .50 LIST OF TABLES Table 3.1 Measurement items for the survey 19 Table 4.1 Demographic information of respondents 25 Table 4.2 The codes of variables 26 Table 4.3 Descriptive statistics of 150 respondents 27 Table 4.4 Items loading and composite reliability of the constructs 30 Table 4.5 Convergent validity among constructs 31 Table 4.6 Discriminant validity: Fornell-Larcker criterion 31 Table 4.7 Collinearity statistics (VIF) of exogenous variables 32 Table 4.8 Results of hypothesis testing from structural model 33 Table 4.9 Mediation test results 34 i LIST OF FIGURES Figure 1.1 Global market value for natural and organic cosmetics from 2018 to 2027 Figure 2.1 Theory of planned behavior model (Ajzen, 1991) Figure 2.2 The proposed theorical model 17 Figure 3.1 Research procedure by the author 18 Figure 4.1 The measurement model (PLS algorithm) 29 ii LIST OF ABBREVATIONS AVE Average variance extracted CR Composite reliability TPB Theory of planned behavior TRA Theory of reasoned action VIF Variance magnification factor iii CHAPTER 1: INTRODUCTION 1.1 Research background It cannot be denied that, the environment is having sudden changes under the influence mainly from human activities in recent years With warnings such as global warming or natural disasters happening with increasing frequency, this is affecting every living thing across the earth and it is also changing economic activities, human society According to Haytko and Matulich (2008) indicated that environmental issues and their consequences for human health have become a significant concern for governments and organizations As a result, there has been a movement toward environmental sustainability, which has led to improvements in consumer demands and behavior (Mendelson & Polonsky, 1995) Many plans and initiatives to enhance and preserve habitats and natural resources have emerged as a result of increased awareness and concern about environmental issues Green product lines, organic products appear and are constantly being developed, such as organic food, organic cosmetics, renewable energy, … (Kim & Chung, 2011) Natural and organic goods are becoming increasingly popular among consumers, who believe they are good for their health and the environment This trend indicates that consumers are becoming more responsible for their consumption habits (Maragon et al., 2015) Currently, the market for natural and organic cosmetic products is growing significantly in recent years Particularly, global market value for natural and organic cosmetics and personal care from 2018 to 2027 (in billion U.S dollars) which is shown in the figure 1.1: Figure 1.1 Global market value for natural and organic cosmetics from 2018 to 2027 (Units: billion U.S dollars) (Source: Statista.com) According to the statistics, organic cosmetics have a higher international growth rate than traditional cosmetics, which is more or less fluctuating Organic cosmetics are considered to be healthier, better quality and eco-friendly for environment because these products are manufactured under a rigorous process, the ingredients are grown without pesticides, synthetic fertilizers or genetically modified substances With these outstanding features of organic cosmetics, consumers tend to use this product more than traditional cosmetics Therefore, organic cosmetics are creating many potential opportunities for businesses to take advantage of product development to meet consumer needs On the other hand, Vietnam is emerging as one of the promising markets for cosmetic development in recent years in Asia The report of Mintel indicated that Vietnam cosmetic market has value at 2.3 billion USD in 2019 Revenue in the Cosmetics segment amounts to 506,9 USD in 2020 and the market is expected to grow annually by 5,3% (CAGR 2020-2023) The population of Vietnam has exceeded 97 million people in 2020 (General Statistic Office, 2020) It is estimated that by 2020, the Vietnamese middle class will be the major consumers and payers for the rapidly growing cosmetic product consumption, growing to 33 million people This estimate is based on the results of a high economic growth rate of over 6%-7% annually and a young generation a product, they find that the product is suitable for their body, the intention to buy that product will be very high Therefore, to ensure product quality to satisfy consumers, the manufacturing process needs to be rigorously tested by the manufacturer to guarantee that organic cosmetics always have outstanding features such as organic and natural ingredients, no synthetic chemical drugs In addition, another way to increase consumer familiarity and experience with organic cosmetics is to use a sales strategy that incorporates which is known as co-marketing with the traditional cosmetics Specifically, when a consumer buys a makeup cosmetics product, an organic makeup remover can be added as a bonus so that the customer can experience more In addition, the services of free skin examination and consultation can be used for consumers On the other hand, expertise of organic cosmetics also plays an important role in consumer purchasing decisions Besides spreading product information on advertising channels, or increasing customer experience through trial products, organic cosmetics businesses can organize contests or events related to protecting the health and the environment, this will help consumers better understand the product Thirdly, most of the consumers in the survey are highly aware of issues related to the environment and they are interested in the environmental friendliness of organic cosmetics, which is one of the factors affecting their intention to buy the product again Therefore, it is suggested that organic cosmetics businesses can use eco-labeling on products that can highlight the eco-friendliness of organic cosmetics compared to traditional cosmetics Instead of petroleum-based packaging, organic cosmetics can be packaged in bags manufactured from environmentally friendly materials such as bark, non-woven bags, or biodegradable nylon bags Cosmetics packaging and lids could potentially be made from such materials This will help to safeguard the environment while also reducing product input prices dramatically for producing the organic cosmetics In addition, marketers can run campaigns to exchange used packaging for gifts, which both significantly reduce the amount of waste in the environment and can recycle the packaging, saving costs Finally, research has shown that health and safety consciousness influence consumers' attitudes towards buying organic cosmetics So, one proposition for organic cosmetic manufacturers is to produce and introduce more products which are safer for health For 39 domestic cosmetic manufacturers, it is necessary to improve technology and farming systems to register for organic standards and follow the direction of producing organic cosmetics because this is predicted to be a consumption trend of consumers for cosmetics Meanwhile, natural materials are a great advantage of Vietnam, manufacturers can utilize and develop more products To increase consumer awareness of the healthy and safe value of products, companies and manufacturers should consider obtaining organic certifications by reputable organizations such as the USDA organic, ECOCERT this will ensure the quality of products to consumers In addition, marketers should highlight product health and safety-related attributes in marketing campaigns or in special slogans to increase awareness of product value and satisfy consumer needs 5.3 Limitations and future research recommendations Although the research topic has made practical contributions in theory and practice, this research topic also has certain limitations, helping to open up new research directions in the future As follows: Firstly, this study was conducted only in Hanoi, Vietnam, and the proportion of women in the sample was also much larger than the proportion of men, which may reduce the representativeness of the study Therefore, in future research, it is possible to expand the sample size and survey more locations in Vietnam so that the research results can reflect more fully and generally In addition, the convenience sampling method has limited the representativeness of the research results Further studies should implement the sampling method probabilistically to check the certainty of the outcome Convenience sampling probably led to correlation in the data and this limited the effect the force of the proposed causal directions Secondly, in this study, the demographical aspects of consumers are not been looked into as different factors but just as descriptive information for the sample, it is recommended them as further direction for looking into predictors for repurchase intention of organic products Thirdly, the study cannot account for all of the elements that influence consumers' intention to rebuy organic cosmetics, so the following studies may consider 40 investigating other factors such as trust, brand loyalty, customer satisfaction In addition, the study was limited to measure the intention and not the actual behavior of consumers, so in future studies it is possible to 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To what extent these factors impact consumer repurchase intention organic cosmetics? What factors affect consumers’. .. affects to the consumer’s repurchase intention toward organic cosmetics 2.9 Proposed research model Based on the reviews of previous studies on factors affecting consumers intention to repurchase organic. .. important factors that impact repurchase intention such as price, customer satisfaction, etc Contribution: The study provides knowledge related to the factors which influence intention to repurchase