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 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com 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 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com 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 self- administered 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. 1 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com TALE OF CONTENTS ABSTRACT. Research objectives and aims.
Theoretical review: Theory of Planned Behavior. Buying motives and buying barriers of organic vegetable. Research hypothesis and research model. Data collection method.
Data analysis method. Profile of respondents .21 2 LUAN VAN CHAT LUONG download : add luanvanchat@agmail. Scale validity and reliability. Exploratory Factor Analysis (EFA).
Adjusted Research Model. Awareness of benefits. Testing the hypotheses. Testing hypotheses results.
CONCLUSIONS AND LIMITATIONS. Summary of research. Suggestion for further researches. PP Plot and Scatterplot for Dependent Variable Willingness.
PP Plot and Scatterplot for Dependent Variable Awareness of Benefits .56 3 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com LIST OF TABLES Table 3. Summary of scales used in survey questionnaire. Age range * Using organic vegetable frequency. EFA for individual scales.
Cronbach's alpha index. EFA rotated component matrix - 1st. EFA rotated component matrix - 2nd. Factor Awareness of benefits.
Multiple Regression Analysis Model. Willingness to Purchase Multiple Regression. Awareness of Benefits Multiple Regression .37 LIST OF FIGURES Figure 2. Theory of Planned Behavior.
Beliefs connected to organic food. Using organic vegetable frequency. Relationship between organic vegetable using and number of children in the family and family food purchaser educational level. Adjusted research model.
Awareness of Benefits combining. Multiple regression method results.38 4 LUAN VAN CHAT LUONG download : add luanvanchat@agmail. 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”.
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 do 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 5 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com households who choose organic vegetables for their meals. They are willing to pay a premium for organic vegetables.
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.
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. 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 6 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com 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. 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. Thesis structure The structure of this research is organized in five chapters. Chapter 1 is concerned with the introduction of the thesis which includes research background, research problems and research objectives.
Chapter 2 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 3 introduces the design of the research. This chapter starts with research validity and reliability and goes to stage of data collection in assessing the 7 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com 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 4 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 2. Chapter 5 relates to the conclusions, implications and limitation.
Suggestions of further research are also mentioned in this chapter. 8 LUAN VAN CHAT LUONG download : add luanvanchat@agmail. LITERATURE REVIEW A detailed literature review was undertaken on Theory of Planned Behavior and findings of past studies in organic vegetables. Through the discussion, the hypotheses and research model will be proposed.
Theoretical review: Theory of Planned Behavior In order to explore the factors drive consumer willingness to purchase organic vegetable, it is necessary to identify the factor influence their intentions and trends. As such, theory of Planned Behavior (TPB) has been applied (Ajzen, 1988). The theory proposes a model which can predict human behavior with suggesting that a person's behavior is determined by his/her intention to perform the behavior and that this intention is, in turn, predicted by attitudes about the behavior, the subjective norms (a person’s perception of important others’ beliefs that he or she should or should not perform the behavior) encasing the execution of the behavior, and the individual’s perception of their control over the behavior. The TPB model is the successor of the similar Theory of Reasoned Action of Ajzen and Fishbein in 1980.
The succession was the result of the discovery that behavior appeared not to be 100% voluntary and under control, which resulted in the addition of perceived behavioral control. With this addition the theory was called the Theory of Planned Behavior. (Rebecca et al. 9 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.
Theory of Planned Behavior Source: Ajzen, 1988 In many studies, only one or two rather than three of the cognitive determinants- attitudes, social norms, and perceived behavioral control-significantly relate to intentions. For example, a study of Budden and Sagarin (2008) examined whether attitudes towards exercise, subjective norms, and perceived behavioral control were related to intentions to exercise. The study found attitudes to exercise and perceived behavior control were related to intentions to exercise. Subjective norms, however, did not uniquely contribute to these intentions.
Buying motives and buying barriers of organic vegetable Through preliminary researches, the author notices there are several factors which affect the willingness to buy organic foods among the consumers, such as income, education, gender, size of family and presence of children in family. Consumers with high income and high education are more likely to buy organic food to reflect on their awareness and status (Idda et al., 2008, Gracia and Magistris, 2007).