RESEARCH PROJECT (BMBR5103) DETERMINANTS OF CONSUMER’S GREEN PRODUCT PURCHASING IN HO CHI MINH CITY STUDENT’S FULL NAME : HUYNH KIM VIET STUDENT ID : CGSVN00014994 INTAKE : MBAOUM0313 ADVISOR’S NAME & TITLE : A. PROF. NGUYEN PHAN August 2014 Advisor’s assessment Advisor’s signature ACKNOWLEDGEMENTS I would like to thank several people who made this work possible for me with their continuous support and encouragement. First of all I am grateful to my thesis supervisor A. Prof. Nguyen Phan, for his patience, advice and support during my entire thesis work. He guided and motivated me during the whole process of my research. Secondly, I would also like to thank all the respondents who participated in my survey and I believe that without them this thesis couldn´t be possible. I am thankful to my classmates for their time and support during my researching. Finally, special thanks go to my families and friends for their continuous support. Huynh Kim Viet Ho Chi Minh City, August, 2014 ABSTRACT Today, global warming is one of the major threats towards the planet and many countries, especially coastal countries. The weather is changing everyday and disasters are happening all over the places of our planet. Now, people all over the world are more concerned with methods to protect the environment. For instance, consuming green products or eco-labelled is one of the key ideas that could be carried out by consumers on over the world. In developed countries, there has been many research conducted in this area, however, there is limited research worked on developing countries, Asian and Vietnam, especially in Ho Chi Minh market. Hence, the objective of this study is to examine the factors that influence consumers to purchase green products in Vietnam, especially in Ho Chi Minh City which is the most crowded population city in Vietnam. Due to the environmental issues, green products have got more attention during the latest years and the availability of such products is increasing in many food stores in super market and groceries. Governments in some countries are supporting these label products to ensure the sustainable development for environment and a better quality of life for everyone, and for the generations to come. I have short-listed several factors during literature review which can influence the consumers green purchase behavior and these factors are; Eco-motivation, Ecoknowledge, Gender, Peer influence, Price and Shelf space. The purpose of my study is to get a deeper understanding of the determinants that can affect customer‟s green product purchasing of food products in Ho Chi Minh City. Thus my main research question that I want to answer with this study is: “Which are the most important factors that influence the purchase behavior of eco-labelled products?” This quantitative study is carried out in Ho Chi Minh City, Viet Nam with 200 respondents and focuses mainly on the food market consumers (super market and groceries). I stand on researcher position for this study and I believe that cross-sectional research design is most suitable to fulfill my research purpose. I developed several null hypotheses and for this purpose I distributed my research questionnaire at the entrance of different super markets and groceries in Ho Chi Minh City, Viet Nam to collect my data from the respondents. I applied convenience sampling with simple quota to this research. I dissected and evaluated the gathered data with help of SPSS. Key words: Purchase decision, Green marketing, Eco-labeling, Shelf space, Ecomotivation, Eco-knowledge, Gender, Price, Peer influence, Green product, Green marketing, Green consumer profile, Ho Chi Minh consumers. Table of contents Chapter 1: Introduction 1.1 Problem background 1.2 Research purpose and research questions 1.3 Limitations 1.4 Definitions of key terms 1.5 Disposition of the study Chapter 2: Literature review 2.1 Green marketing 2.1.1 Green consumer behavior; consumer confusion 2.2 Eco-labeling; a part of green marketing 2.2.1 The background of eco-labeling 2.2.2 Eco-market 2.2.3 Can Eco-labeling be used as a Consumer Decision Tool 2.3. Consumer purchase behavior 2.3.1 The consumers purchase process 2.3.2 The Green consumer purchasing model 2.4 Consumer categories 2.5 The Attitude-norm-behavior Relationship 2.5.1 The Fishbein Model 2.6 Factors having influence on Consumers purchase Behavior 2.6.1 Consumer Awareness and Knowledge 2.6.2 Eco-motivation 2.6.3 Price, Packaging, package resealability or Brand 2.6.4 Demographic Factors influencing the consumer 2.7 My Study Framework 2.7.1. Suggested Research Testing Model and positioning of study Chapter 3: Research Methodology 3.1 Research Philosophy or Perception of Knowledge 3.2 Research Approach and Strategy 3.3 Research Design 3.4 Data Collection Methods 3.5 Social-Survey Questionnaire 3.6 Ethical Consideration 3.7 Truth Criteria 3.7.1 Reliability 3.7.2 Validity 3.7.3 Replication 3.8 Practical Methodology 3.8.1. Research Sample 3.8.2. Research Preconception 3.8.3. Designing and Pre-testing of the Questionnaire 3.8.4. Statistical Tests 3.8.5. Questionnaire coding Chapter 4: Data Analysis and results discussion 1. Frequency Table 2. Factor Analysis Chapter 5: Conclusion of the Study 5.1 The Influencing Factors 5.1.1 My Research Contribution 5.1.2 Research Recommendations References Appendices Questionnaire in English Chapter 1: Introduction Environmental friendly products or green products have got more attention during the recent years in many countries and the purchasing of these products is increasing in many countries, especially in developing countries. One form of environmental friendly products is eco-labelled products which have got more relevance and attention for the consumers in their buying decision and there are now more products to choose among them in super market and groceries. In this thesis, I am going through the influencing factors that can have a possible impact on the consumer‟s green purchase behavior. Thus, the main purpose of this research is to study the determinants of that influence the purchase behavior of eco-labelled products in Ho Chi Minh City. I start with introducing the problem background and the research subject of my thesis. And further on I define some important terms for the searching. 1.1 Problem background Today, environmental protection is a sustain development in many countries and is becoming more important when it comes to climate change, scarcity of water, natural resources, melting ice in the Arctic and other ecological challenges in many countries. It is becoming obvious that traditional corporate environmental management approaches based mostly on conformity and smaller risk assessments will not be sufficient to successfully deal with the 21st century sustainability challenges (United Nations, 2011). It is clear now that all of us humans have an impact on the environment. At the same time toxic gases are polluting the atmosphere and dramatic changes can thereafter occur in the climate (World Wide foundation, 2011). The released carbon dioxide gas in the atmosphere is more than what can be absorbed by the ecosystems, oceans and geological systems. There are already some signs that the global pollution is too much for the planet to handle in the form of a warmer climate that is causing the glaciers to melt, sea levels to rise and at the same time droughts and flooding are increasing. It could potentially affect life on the planet, while others may argue that this is just some natural phenomena‟s. When mentioning these sustainability challenges one important tool for environmental protection is the concept of “sustainable development”. Sustainable development is offering a “vision of progress that integrates immediate and longer-term objectives, local and global actions”. This sustainable development also regards social, economic and environmental issues as inseparable and interdependent components of human progress (European community, 2011). To be more sustainable and to protect the environment during production and consumption of products, governments in most developed countries have implemented policies to reduce the environmental harm done by consumption. Such reduction in pollution has done by banning polluting ingredients or by imposing taxes on unsustainable practices (Thøgersen & Ölander, 2006, p. 17581759). Following the Rio Earth Summit in 1992, when the United Nations held their climate conference; a global action program for sustainable development was introduced with the name of „Agenda 21‟. In this meeting „eco-labeling‟ was identified as a way to encourage consumers to more sustainable consumption choices. Nowadays more ecolabelled products are available when it comes to almost all kind of products in the stores, especially in the food stores. The growing interest of consumers in environmental protection has compelled many companies to be actively involved in making their products greener. This growing interest in climate change during the past couple of decades led to increased demand for green labeling, which allow the consumers to differentiate between more and less sustainable options (Horne, 2009, p. 175). It has also been shown that the interest in being green and the purchasing of eco-friendly products continues to grow (Orange, 2010, p. 29). All the different selections between products that consumers make on a daily basis have an impact on the environment. It is believed that different factors can affect the customers during the evaluation process of eco-labelled products and therefore there are different reasons underlying the purchase decision such as the price difference. Thøgersen suggests avoidance of too large a price gap between eco-labelled and conventional products (Thøgersen, 2006, p. 1774-1776). When it comes to knowledge about eco-labels, there exist some potential barriers for some consumers because they face problems understanding the contents of different eco-labels in the store, while others find the information‟s hard to read (Leire & Thidell, 2004, p. 1068; D´Souza Taghian & Lamb, 2006, p. 168-170). Some of the consumers distrust the eco-labels and their credibility has also been questioned by several researchers (Erskine & Collins, 1997, p. 125; Nilsson, Tuncer & Thidell, 2004, p. 517; Orange, 2010, p. 29; Horne, 2009, p. 176). Some companies use the symbol of a leaf, flower or fish on their labels (though these are not eco-labels) which has the potential to confuse the consumers (Naturskyddsföreningen, 2012). Leire & Thidell (2004) and Thøgersen (2000) discuss the importance of eco-motivation (which influences the purchase behavior of eco-labelled products) in their separate studies. It has been investigated whether demographic factors can affect consumer behavior and the potential influence of attitudes (Fransson & Gärling, 1999, p. 371). During purchase decisions people may consider others opinions which may be their friends or family members (Solomon, Bamossy, Askegaard & Hogg, 2006, p. 155-156). My study tries to investigate the influence of above-mentioned factors on the purchase behavior of eco-labelled food products. Being author, I am motivated to an empirical study which targets the customers of Ho Chi Minh City, Vietnam. These factors have mostly been investigated separately by different researchers; in contrast, here I study them together for their influence on the purchase decision of eco-labelled food products. This study will give me an opportunity to understand which factors have more influence in stimulating green purchase of food products. 1.2 Research purpose and research questions The purpose of this study is to get a deeper understanding of the factors that can affect green purchase of food products in Ho Chi Minh City. It is of importance to know what is having the greatest impact on the consumers to buy or not to buy these eco-labelled products. The main research question that I want to answer with my study is: “Which are the most important factors that influence the purchase behavior of eco-labelled products?” 1.3 Limitations I have restricted this study to food products where an eco-label can be applied. This decision was done due to limited resources; it will be beneficial to extend this study to other products too. The study was carried in Ho Chi Minh City, Vietnam which can not represent the characteristics of whole consumer food market on over the world or over Vietnam region. My sample size is quite small as I have planned to have 200 respondents, in comparison with the whole Ho Chi Minh population, approximately 10 millions. Beside this, my method of data collection is convenience sampling which cannot result in a representative sampling, so it is quite hard to generalize my results to the whole food market. During data analysis I faced several problems which are concerned about the responses about several questions. For some questions I have got more than 95% responses for one option in the question, some responses not answering income question, which limits my testing capacity. Finally, I have limited this research to evaluate only six factors due to time constraints andI suggest to include other factors too for example; age, education, gender, income, lack of time, guilt for the environment, habits, norms, values, packaging, and brand name. 1.4 Definitions of key terms: Agenda 21: Agenda 21 is a comprehensive plan of action to be taken globally, nationally and locally by organizations of the United Nations System, governments and major Groups in every area in which human impacts on the environment. Agenda 21, the 10 In search of job other Total 12 6.0 6.0 200 100.0 100.0 100.0 Income Percen Frequency t Valid Valid Percent Cumulative Percent 5,000,000 VND 32 16.0 17.3 17.3 5,100,000-10,000,000 VND 87 43.5 47.0 64.3 10,100,00020,000,000 VND 45 22.5 24.3 88.6 Over 20,000,000 VND 21 10.5 11.4 100.0 185 92.5 15 7.5 200 100.0 100.0 Total Missing System Total 51 2. Factor Analysis KMO and Bartlett's Test Kaiser-Meyer-Olkin Measure of Sampling Adequacy. Bartlett's Test of Approx. Chi- Sphericity Square .640 345.055 Df Sig. 21 .000 The over table show two tests that indicate the suitability of my data for structure detection. The Kaiser-Meyer-Olkin Measure of Sampling Adequacy is a statistic that indicates the proportion of variance in your variables that might be caused by underlying factors. High values (close to 1.0) generally indicate that a factor analysis may be useful with my data. If the value is less than 0.50, the results of the factor analysis probably won't be very useful. Bartlett's test of sphericity tests the hypothesis that your correlation matrix is an identity matrix, which would indicate that my variables are unrelated and therefore unsuitable for structure detection. Small values (less than 0.05) of the significance level indicate that a factor analysis may be useful with my data. 52 Communalities Initial Extraction Gender 1.000 .662 Understandability 1.000 .663 Price 1.000 .769 Shelf space1 1.000 .474 Shelf space2 1.000 .502 Peer influence 1.000 .863 Price 1.000 .952 Extraction Method: Principal Component Analysis Total Variance Explained Compo nent Extraction Sums of Squared Rotation Sums of Squared Loadings Loadings % of Cumulative % of Cumulative Initial Eigenvalues % of Cumulative Total Variance % Total Variance % Total Variance % 2.430 34.711 34.711 2.430 34.711 34.711 2.357 33.665 33.665 1.428 20.403 55.114 1.428 20.403 55.114 1.496 21.367 55.032 1.027 14.673 69.787 1.027 14.673 69.787 1.033 14.755 69.787 .822 11.744 81.532 .619 8.850 90.381 .474 6.765 97.147 .200 2.853 100.000 Extraction Method: Principal Component Analysis. 53 Component Matrix(a) Component Peer influence .881 -.280 Price .856 -.179 Understandability .808 Gender .256 .722 Shelf space1 -.275 .680 Shelf space2 .439 .557 Price .124 .965 Extraction Method: Principal Component Analysis. a components extracted. Rotated Component Matrix(a) Component Peer influence .925 Price .872 Understandability .804 Gender .121 .789 -.193 .160 Shelf space1 -.128 .658 Shelf space2 .272 .650 Price .974 Extraction Method: Principal Component Analysis. Rotation Method: Varimax with Kaiser Normalization. a Rotation converged in iterations. 54 From the above table show that determinants of consumer‟s green products in Ho Chi Minh City are peer influence, price and understandability. Component Transformation Matrix Component .963 .268 .036 -.270 .958 .099 -.008 -.105 .994 Extraction Method: Principal Component Analysis. Rotation Method: Varimax with Kaiser Normalization 55 Chapter 5: Conclusion of the Study In this part of the thesis, I discuss, interpret and conclude the meaning of our study results. I also find out and discuss if I have answered my research questions and fulfill the purpose with the study. Finally, in the end of this chapter of the thesis I will discuss my contribution with my study and also try to give some further recommendations to other researchers. 5.1 The Influencing Factors Eco-labeling; a marketing tool to help the consumers in their decision making plays a substantial role in raising the consumer‟s awareness about environmental protection and such awareness guide the consumers in green purchasing. On the other hand, there are several factors which may influence the purchase behavior of eco-labelled products. Most of the studies have been conducted on the effectiveness of eco-labeling and consumer attitude towards environmental products but some of them have missed to investigate income. There is limited combine research available regarding eco-labeling and these factors; therefore, I have decided to investigate the influence of various factors on the purchase decision of eco-labelled products in Ho Chi Minh City, Vietnam. The purpose of this study is mainly to understand the most important factors that can influence the purchase behavior of eco-labelled products. For this purpose, I select several elements to understand the actual role of these factors regarding purchase behavior of eco-labelled products. Eco-motivation, eco-knowledge, gender, peer influence, understandability and price was taken along with education. The relationship between these six elements and interest in eco-labelled products were tested in the first phase of statistical analysis and successfully pointed out the different elements which has the potential contribution in the interest development towards eco-labelled products. High education and affecting from other people towards eco-labelled products can be transformed into environmental purchase. Strong influence of eco-motivation is showing 56 that this is an important factor in the purchase decision. If the consumer has trust, belief and knowledge in the eco-labelled products he/she will certainly be motivated to buy these types of products. On the other hand, my study shows statistically insignificant relationship between peer influence and interest in eco-labelled products. The correlation test shows statistically significant positive relationship between peer influence and the actual purchase of eco-labelled products. Therefore peer influence is the most important factor that influences the purchase decision and the focus should be mainly on eco-motivation and peer influence. The researching show that the price factor affect on consumers to buy green product, that mean the price has a important role in buying green products. 5.1.1 Our Research Contribution I limit my research to the influence of above discussed seven factors on the consumers purchase behavior of eco-labelled products which is different from other researchers work as mostly they have investigated ecological behaviors and eco-labeling. I believe that this study will contribute with new valuable research in the area of eco-labeling in the Ho Chi Minh consumer food market. My theoretical part investigates the available information about eco-labeling, eco-motivation, eco-knowledge, price, peer influence, gender and education while the empirical part has evaluated these variables which can influence the purchase beha behavior of eco-labelled products. I have found that ecomotivation and shelf-space contributes in the creation of actual purchase of eco-labelled products. As eco-labelled products in some cases have had problem with penetrating the market so it is of value to have the right knowledge of the valuable marketing tools that affect the consumers more or less while making their purchasing decision of green products. This dimension of our research will help the researcher while working on a similar topic. I recommend to producers and retailers to provide eco-labelled products in the Ho Chi Minh market as my research shows positive correlation between income and 57 purchase behavior of eco-labelled products and they can increase the sale of these products as there is sufficient eco-motivation. 5.1.2 Research Recommendations For marketers, I strongly recommend to use eco-labeling as a one of the marketing strategy (as a communication tool to satisfy various stakeholders) and to provide the eco-labelled products in the supermarket in Ho Chi Minh City to ensure the availability of eco-labelled products. The availability of eco-labelled products in the supermarkets can create the attention or interest of the consumers, this interest can be changed into purchase by other tools. Marketer can consider green product for the future development of the company. The eco-motivation and eco-knowledge contributes strongly in the creation of interest in eco-labelled products, so I suggest the marketers to increase the eco-motivation and eco-knowledge of the Ho Chi Minh consumers. For this purpose, I think that in eco-labelled products exhibitions, seminars and advertisement can play vital role. These elements contribute in the development of interest towards eco-labelled products. Eco-motivation and eco-knowledge are the strongest elements which create attention towards eco-labelled products. If I look at the sub-variables of eco-knowledge for example; many of the respondents believed that it is important to be environmental friendly. Belief is also considered one of the strong element in developing ecomotivation, I suggest marketers to increase the eco-motivation of the Ho Chi Minh consumers by some promotional activities. One of the eco-motivation questions was covering if there were any influence of price of eco-labelled products and for this query I recommend to make it clearer and more visible for the consumers that how the product has been produced, packaged, transported and delivered to make it more trustworthy and to increase the eco-motivation of the consumers. For further research in this area I recommend the researchers to conduct the research 58 with bigger sample in a bigger city or cities to be able to generalize the results to the whole population. 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You will be anonymous and your answers will only be used in this thesis. The survey takes approximately 5-6 to answer. 1. Have you ever bought an eco-labelled product? Yes □ No □ I don´t know □ 2. Do you have an interest of buying eco-labelled products? Yes □ No □ It depends of the products □ 3. Do you think that there is any difference between conventional products and ecolabelled products? Yes □ No □ I don´t know □ 4. How often you buy eco-labelled products? Every week □ Rarely □ Every month □ Quarterly □ Never □ 5. Do you feel any deficiency of eco-labelled products in the stores? Yes No I don´t know 6. If there were more shelf space for eco-labelled products would you buy more of these products? Yes No 7. Do you buy products that stand out on the shelf in the store? 63 I don´t know Yes No I don´t know Please read these following statements thoroughly and choose the number that represents how you agree or disagree on them. Answer them by circle the number that corresponds best with your own opinion. (Strongly disagree=1, Strongly agree=5). 8. Do you enjoy shopping products in the store? 9. Do you believe that you are influenced by other people‟s opinion such as friends, relatives to affect you choice between conventional or eco-labelled products? 10. Do you believe it is of importance to evaluate different consequences before buying the products? 11. Is it easy to compare the available eco-labelled products on the market? 12. Do you believe that eco-labelled products are beneficial for the environment? 13. Do you find the available eco-labels on the market trustworthy/credible when it comes to taking responsibility for the environment? 14. Do you find the available information about the eco-labelled products? 15. Do eco-labelled products affect your buying intention? 64 16. Do you believe it is important to be environmental friendly? 17. Is transparency in the whole production process, transportation, packaging etc. an important factor in choosing eco-labelled products? 18. Do you find it easy to understand the information/content of the eco-labelled products? 19. Do you believe that the price for eco-labelled products is satisfying? 20. When choosing between conventional and eco-labelled products does the price affect your product choice? General information 21. What is your gender? Female □ Male □ 22. Please fill in your age? 18 to 30 □ 31 to 40 □ 41 to 50 □ Over 50 □ 23. Education: Never go to school □ Elementary school □ Junior high school □ High School □ Vocational Training School □ College □ University □ After University □ 24. Present activity: 65 Working □ Studying □ Pensioner □ In search of job other □ 25. What is your approximated monthly income? 5,000,000 VND □ 5,100,000-10,000,000 VND □ 10,100,000-20,000,000 VND □ Over 20,000,000 VND □ Thank you for your kindly participation in this survey, Best regards 66 [...]... Juslin (2001) defines green marketing as “the holistic management process responsible for identifying, anticipating and satisfying the requirements of customers and society in a profitable and sustainable way” The basic question for green marketing is: how should environmental and social responsibility become integrated into traditional useful business and marketing planning (Kärnä, Hansen & Juslin,... is most frequently associated with the greening of the different aspects of traditional marketing This generally involves the production of "green" products for sale to green consumers who are interested in recycling the waste from their consumption Growing concerns for the environment at all levels in the society have led to a considerable increase in number of products marked as environmentally friendly... competitive advantage in the form of giving 27 an alternative of products that can be less harmful to the environment Many consumers are in favor of green products but at the same time there is a risk that the companies can take advantage of the consumer´s green interest and use it as a marketing tool instead of being green for real Some of this criticism about the marketing of eco-labelled products is critical... friendly products The model classifies consumers into four different categories: emerging green consumers, conventional consumers, environmentally green consumers and the price sensitive green consumers On the right side is the emerging green consumers and the conventional consumers; they give emphasis to the inherent brands on the market The emerging green consumers can see the benefits with green products... turns more to the actual product choices Pricing of eco-labelled products was shown to be one of the factors that mostly could influence the consumer‟s potential interest in these products The average level importance of Environmental packaging was a strongly preferred product attribute when consumers chose among functional drink products that was 34% while the relative importance of price was 35%, for... study findings Conclusion of the Study The main findings in the research is discussed and evaluated I have included recommendations too for further research 13 Chapter 2: Literature review In this chapter, I focus on eco-labeling of products from the consumer‟s perspective to be able to get a deeper understanding of the influence of different factors on the consumers purchase behavior of eco-labelled products... in the consumer‟s knowledge about these products Informed product choices are a prerequisite for consumers being able to make greener decisions Some consumers have also problems when it comes to confidence on the eco-labels When considering product related environmental information the dynamic context and the purchase decision should also be considered in the evaluation of making a green decision How... purchase of environmental friendly products (Rahbar & Wahid, 2011, p 80) 2.2 Eco-labeling; a part of green marketing 2.2.1 The background of eco-labeling Eco-labeling is one of the measures proposed to achieve the sustainability goals in Agenda 21, because it is thought as having the potential to increase the consumers awareness about the environment It also has the potential to affect different sectors in. .. store 2.1 Green marketing In the late 1980‟s the idea of green marketing emerged (Peattie & Crane, 2005, p 358) During the 1990‟s marketing research indicated that many consumers were concerned about the environment Many firms responded to this concern by adjusting their promotional campaigns (Peattie & Crane, 2005, p 360-361) There is now a growing interest in green marketing and sustainable incentives... definitely it is cost saving and quick to administer among respondents while they are visiting supermarkets in Ho Chi Minh City, Vietnam I can also eliminate 34 the role of interviewer by not staying with the respondents while they are answering the survey Importantly, self-administered questionnaire as all questions are in the same order for all respondents (Bryman & Bell 2011, p 233) In our case, I distribute . Thus, the main purpose of this research is to study the determinants of that influence the purchase behavior of eco-labelled products in Ho Chi Minh City. I start with introducing the problem. Peer influence, Price and Shelf space. The purpose of my study is to get a deeper understanding of the determinants that can affect customer‟s green product purchasing of food products in Ho Chi. purchase green products in Vietnam, especially in Ho Chi Minh City which is the most crowded population city in Vietnam. Due to the environmental issues, green products have got more attention during