UNIVERSITY OF ECONOMICS HO CHI MINH CITY International School of Business ------------------------------ Truong Thi Xuan Thao AN EMPIRICAL STUDY OF THE INTENTION OF VIETNAMESE CONSUMERS TO PURCHASE LUXURY GOODS 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 ------------------------------ Truong Thi Xuan Thao AN EMPIRICAL STUDY OF THE INTENTION OF VIETNAMESE CONSUMERS TO PURCHASE LUXURY GOODS ID: 21110021 MASTER OF BUSINESS (Honours) SUPERVISOR: Dr. NGUYEN THI MAI TRANG Ho Chi Minh City - Year 2014 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com ACKNOWLEDGEMENT Firstly, I would like to express my gratefulness to my supervisor Dr. Nguyen Thi Mai Trang for her professional guidance, intensive support, valuable suggestions, instructions and encouragement during the time of doing my research. I would like to express my deepest gratitude to Professor Nguyen Dong Phong, Professor Nguyen Dinh Tho, Dr.
Tran Ha Minh Quan for their valuable time as the members of the proposal examination committee. Their comments and meaningful suggestions were contributed significantly for my completion of this research. 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. LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com ABSTRACT In recent years, the strong development of economy has increased significantly the number of rich people in Vietnam.
Higher disposal income together with economic globalization leads to more concern to luxury products among Vietnamese people, especially in Ho Chi Minh City. This trend opens many opportunities and challenges for international luxury companies who plan to enter Vietnam’s market. In an effort to help luxury companies have an overview about consumers’ behavior in such market, this study examines influencing factors that affect Vietnamese consumers’ attitude towards purchasing luxury goods and their purchase intent of luxury goods. Employing regression analyses, the research findings indicate that brand consciousness, materialism, and the need for uniqueness have significant impact on attitude towards purchasing luxury goods among Vietnamese consumers.
In addition, consumers’ purchasing intention of luxury goods is affected by their attitude towards buying luxury goods. Practical and managerial implications are also further discussed. Keywords: luxury goods, attitude towards purchasing luxury goods, purchase intent LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com TABLE OF CONTENTS ACKNOWLEDGEMENT ABSTRACT TABLE OF CONTENTS LIST OF FIGURES LIST OF TABLES CHAPTER 1: INTRODUCTION .4 Research methodology and research scope .7 CHAPTER 2: LITERATURE REVIEW .2 Attitude towards purchasing luxury goods and purchase intent .6 The need for uniqueness .7 The conceptual model and hypotheses of the research .18 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com CHAPTER 3: RESEARCH METHODOLOGY .2 Data collection and procedure .4 Data analysis method .28 CHAPTER 4: DATA ANALYSIS AND RESULTS .3 Exploratory Factor Analysis (EFA).1 EFA for Independent variables .2 EFA for Dependent variables .1 Simple Regression Analysis .2 Multiple Regression Analysis .39 CHAPTER 5: CONCLUSION, IMPLICATIONS AND LIMITATIONS .3 Limitations and future research .59 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com LIST OF FIGURES Figure 2.24 Figure E1: Histogram of Attitude .68 Figure E2: Normal Plot of Attitude .68 Figure E3: Scatter Plot of Attitude.69 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com LIST OF TABLES Table 3.1 Source of data collection.2 Source of measurement scale .2 Reliability test result .3 KMO and Bartlett's Test of Independent Variables .4 Rotated Component Matrix of Independent Variables .5 KMO and Bartlett's Test of Dependent Variables .6 Rotated Component Matrix of Dependent variables .7 Model Summary of simple regression analysis .8 ANOVA of simple regression analysis .9 Coefficients of simple regression analysis.11 Model Summary of multiple regression analysis .12 ANOVA of multiple regression analysis .13 Coefficients of multiple regression analysis .14 Summary of hypotheses testing result .46 Table D1: Total Variance Explained of Independent Variables .67 Table D2: Total Variance Explained of Dependent Variables .67 Table D3: Model Summary of multiple regression analysis .67 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com -1- CHAPTER 1: INTRODUCTION 1.1 Research background For many years, people around the world have satisfied themselves with the possession of beautiful and valuable products. As a result, luxury goods have become the hot issue of many discussions and debates.
Today, consumers have at higher discretionary income than ever before. Income has increased throughout social classes, but dramatically in the wealthiest groups (Husic & Cicic, 2009). Current consumers are willing to spend significantly more amounts of money for luxury products. Luxury products are known as the products that perceived premium quality, unique style, designed by well-known luxury brands, and limited accessibility (Hung et al.
In recent years, luxury products have now become easily affordable to more consumers, especially for consumers from the middle class who make more money than ever before (Sun, 2011) and therefore luxury brands have the chance to develop and establish their brand- name worldwide. Especially, the fast growth of economy in Asian countries has opened more opportunities for consumers in those countries accessing luxury products. According to Zhang and Kim (2013), Asia is starting to be recognized as a growing market in luxury sales besides traditional markets such as Europe and the U. Increasing exposure to global media and the popularization of Western lifestyles through local media seem to have increased the desire for high-quality goods and services among consumers in emerging markets (Belk, as cited in Shukla, 2012).
Moreover, around 61 percent Asia-Pacific customers show their willingness of spending their hard-earned money on luxury products, higher than any other area in the world, according to the result of a survey done by Nielsen (Moodley, 2013). With regard to luxury products and services, studying the consumers‟ attitude towards luxury goods in emerging markets is particularly important due to the tremendous growth of luxury LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com -2- consumption among consumers in those markets. Researchers believe that the rapid increasing of new rich consumers in emerging markets is one of the determinants that makes these markets become attractive to luxury firms around the world (Shukla, 2012). China, India, Malaysia, Thailand, and Turkey are out-standing representatives of emerging markets in terms of luxury goods consumption (Shukla, 2012).
Especially, China in recent time has become one of the biggest luxury markets in Asia-Pacific region (Zhang & Kim, 2013). Although Vietnam is not a potential market of luxury products like China is, many luxury brands determine to choose Vietnam as destination for their market expansion strategy. Most of well-known luxury brands worldwide such as Mercedes Benz, Apple, particularly fashion luxury brands as Louis Vuitton, Hermes, Rolex, Calvin Klein, Christian Dior…have already announced their entry in the Vietnam‟s market. There are some reasons that make Vietnam be more attractive to luxury brands.
According to a report of Lee (2012), Vietnam has seen rapid aurbanisation, rising new wealth and higher disposable income among population. Those are significant advantages together with the perception of luxury goods as the driving factor in the “tangibalisation of success” that make Vietnam become a hot destination for the luxury market (Lee, 2012). The desire of showing success and wealth is generally driven by a small of group of rich people, as well as younger population in Vietnam who are trying to make a social recognition through what they wear outside. Hence, using luxury products will be the best way to help Vietnamese people fulfill such desire.
This trend has already supported by a research of Nguyen and Tambyah (2011). In their research, they argue that in Vietnam the consumption of luxury goods, brands, and symbols that are associated with status has rooted in hearts and minds of a large part of Vietnamese population, and the trend is becoming widespread (Nguyen & Tambyah, 2011). Especially, under the impact of economic integration between Vietnam and other parts of the world, many foreign luxury brands officially broaden their business to Vietnam. As a result, people LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com -3- can access branded products more easily than ever before.
Hence, luxury consumption is more and more popular particularly in big cities such as Ho Chi Minh City or Ha Noi. Luxury product categories, including fashion goods, technology goods, and cars, are most loved items in Vietnam. For instance, in recent years Vietnamese consumers show much concern to a smartphone – iPhone, a product of luxury brand Apple. There are many reasons for Vietnamese consumers to prefer iPhone to other kinds of smartphone.
According to Dam (2013), beside out-standing features of iPhone, Vietnamese people believe that using iPhone brings them the feeling of success and higher social status and being admired by others which they cannot feel when using other phones.2 Research gap Purchasing luxury goods in Vietnam can be seen through some official statistic numbers of government. According to a report of Ministry of Industry and Trade of The Socialist Republic of Vietnam (2013), in the first six months of 2013, the import turnover of luxury products is approximate 2.9 billion USD, increase 16.8% more than the same period, most of which are wine, tobacco, jewelry, and mobile phones. Matthaes – Managing director of Taylor Nelson Sofres states that the tendency towards consuming luxury items in population will be higher in next years (Matthaes, 2009). Especially, a recent survey of 29,000 people across 58 countries done by Nielsen shows that Vietnam is in top-three countries that most likely to use luxury goods with 56% of Vietnamese consumers answer that they are willing to pay more money for owning luxury products (Moodley, 2013).
Moreover, Vietnam is expected to share common characteristics such as large population, rapid increase of wealthy people with higher discretionary income with China – the biggest luxury market in Asia. Hence, Vietnam possesses many advantages to be an ideal destination of international luxury brands in near future. However, to be successful in Vietnamese LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com -4- market, such advantages are only necessary but not sufficient conditions. It requires luxury firms to do deliberately and deeply studies to find out what factors stimulate using luxury items of consumers.
In order to further understand the consumers‟ purchase intent of luxury products; it is helpful to know how they perceive or their attitude towards purchasing luxury products. Stated differently, the key factors associated with consumers‟ attitude towards purchasing luxury goods need to be examined. This way, international luxury brands can enhance their understanding and knowledge of consumer behavior towards luxury items which are critical for planning a long term strategy to win the Vietnam‟s luxury market. In the literature, a number of studies about luxury goods (Husic & Cicic, 2009; Amatulli & Guido, 2011; Kogler, 2006) have been conducted up to now.
However, most studies restricted themselves to identify the factors that directly affect luxury purchase intent of consumers. There is little research developed for examining the determinants of consumers‟ attitude towards purchasing luxury goods that exposes much effect on purchase behavior of consumers. In addition, very few scholars do the research about this issue in Asia - a non-traditional market of luxury products. To the best of our knowledge, only the studies of Zhang and Kim (2013), Jeon et al.
(2008), and Hung et al. (2011) have ascertained which factors that the consumers‟ attitude towards purchasing luxury goods depends on in Asia‟s luxury market. More specifically, the research‟s findings of Zhang and Kim (2013) show that brand consciousness and materialism impact significantly on consumers‟ attitude towards purchasing luxury goods in China. On the other hand, the research‟s findings of Hung et al.
(2011) and Jeon et al. (2008) have proved that social influence and the need of uniqueness respectively are also the determinants of consumers‟ attitude towards purchasing luxury goods in emerging markets and Korea‟s market. Those are the markets that possess many similar traits to Vietnam‟s market.