INTRODUCTION
The urgency of the research
Before the trend of global economic integration, Vietnamese businesses focused significantly on building and enhancing their brands, recognizing the crucial role that branding plays in achieving market competitiveness.
A brand has evolved beyond merely serving as an identifier for a business's products; it now represents a valuable asset that reflects the company's reputation and consumer trust Effective brand building involves more than just naming; it encompasses a comprehensive strategy to create a clear and distinct image for the enterprise.
In today's competitive landscape, brands are increasingly recognized as essential assets by businesses of all sizes, including small and medium enterprises As international and regional integration deepens, the significance of a strong brand becomes even more pronounced Brands are viewed as valuable intangible assets that can greatly enhance a business's market position and overall success.
A brand serves as a distinguishing mark that allows consumers to identify and choose a business's goods and services over others A strong brand name is essential for maintaining and expanding market presence, enhancing commercial integrity, and reducing unfair competition among companies In the context of increasing internationalization and globalization, Vietnamese businesses, particularly in Ho Chi Minh City, must focus on developing strong brands to thrive in a competitive landscape and to avoid challenges when entering the global market.
A strong brand instills confidence and reassurance in consumers, encouraging them to choose and purchase products and services from a business Effective brand building establishes credibility, fostering trust and loyalty among customers.
A strong and beloved brand significantly enhances business success, offering substantial benefits The value of a brand lies in its potential to generate profits for the business both now and in the future.
Having a strong brand instills confidence in investors and attracts business partners willing to collaborate and supply essential resources Brands serve as invaluable intangible assets for businesses, motivating even small and medium enterprises in Vietnam to focus on brand development Effective branding goes beyond merely attracting customers; it positions a company as the exclusive provider of solutions to specific problems or needs, ultimately serving as a key problem-solver in the marketplace.
It can be said that: "Branding is a long way for Vietnamese businesses”
Numerous studies and evaluations have explored the factors influencing customer purchasing decisions for brands, with a notable example being the research titled "Consumer Purchasing Decision for Fashion Luxury Brands in Dubai: The Case of Armani." This study highlights the complexities of consumer behavior in the luxury fashion market, particularly in a vibrant city like Dubai.
Authors Mohammad Obeidat and W Daniel Young from the American University in Dubai analyze consumer preferences for luxury fashion brands, focusing on the influence of branded items on social status in Dubai, the local shopping culture, and cultural factors affecting purchasing behavior Utilizing a mixed-methods research approach, data was collected through interviews and a structured survey, revealing that price, quality, loyalty, and customer service significantly impact consumers' purchasing decisions A total of 129 responses were analyzed using SPSS, confirming the influence of these four factors on brand choice The study also examines the renowned brand "Armani" and offers strategic recommendations for its future improvement.
The small limitation of the topic is that due to limited time, the author has chosen quite few interviewees with little samples of N = 129
Despite the lack of research on the factors influencing customer purchasing decisions for consumer goods brands, this study aims to provide valuable insights for entrepreneurs in Ho Chi Minh City By understanding these factors, businesses can develop effective and sustainable brand strategies Establishing a strong brand name is crucial for enhancing competitive advantage among consumer goods producers and is essential for long-term growth and sustainability.
This research aids in enhancing enterprise marketing effectiveness, allowing entrepreneurs and R&D or marketing managers to formulate strategies for managing their businesses and planning for the future By establishing a reputable and recognizable brand, they can effectively communicate their corporate culture while also attracting customers.
The researcher selected the topic "Factors Affecting Customer Purchasing Decisions for Consumer Goods Brands in Ho Chi Minh City Amidst Competitive Integration" to explore and assess these influences, aiming to contribute valuable insights to the economy and the future direction of consumer goods brands.
Purpose and target of the research
- Identify the factors affecting customer‟s purchasing decision for consumer goods brands in Ho Chi Minh City in the integration competition
- Determine the priority order of the impact level these factors affecting customer‟s purchasing decision for consumer goods brands in Ho Chi Minh City in the integration competition
To enhance consumer goods brands in Ho Chi Minh City amidst growing competition, it is essential to implement innovative marketing strategies that leverage digital platforms and social media Brands should focus on building strong customer relationships through personalized experiences and targeted promotions Additionally, investing in sustainable practices and quality assurance can elevate brand reputation and attract environmentally-conscious consumers Collaborating with local influencers and participating in community events will further boost brand visibility and foster loyalty By adopting these strategies, consumer goods brands can effectively promote their offerings and drive growth within the industry.
- Measure the level of consumer goods industry in Ho Chi Minh City today
- Find out and measure the factors that affect customer‟s purchasing decision for consumer goods brands in Ho Chi Minh City
- Understand the brand value of Vietnamese enterprises producing consumer goods
- Learn how to build and develop an effective brand.
Object and scope of the research
- R&D managers and Marketing managers of enterprises producing consumer goods in Ho Chi Minh City
- People using consumer goods in Ho Chi Minh City
LITERATURE REVIEW
Overview of the brand
2.1.1 History of the brand: （Matt, 2014）
Prior to the 1980s, the concept of branding was largely unfamiliar to the business landscape and valuation professionals, who primarily focused on tangible assets like factories, machinery, and equipment when assessing a company's worth.
In the 1980s, a wave of mergers highlighted the increasing value of "brand" as a significant asset, as demonstrated by notable acquisition prices For instance, Nestle Group purchased Rowntree for three times its market value and 26 times its profit, while the Builton Group was sold for an astonishing 35 times its profit.
The importance of brand valuation has become increasingly clear, as brand value is now essential in the business landscape Both managers and experts recognize that a company's strength extends beyond its operational methods and technologies; it also encompasses how consumers perceive and engage with the brand.
Every business, regardless of size, possesses a name or logo that represents its brand A brand serves as a unique identifier, both visible and invisible, for the products or services offered by an individual or organization, as defined by the World Intellectual Property Organization (WIPO).
Branding, as defined by Philip Kotler, encompasses names, terms, symbols, and designs that promote a seller's products and differentiate them from competitors It represents an intangible and invaluable asset for businesses, embodying the unique visual, emotional, rational, and cultural associations linked to a company or product.
1995) The brand is also a trusted promise of Quality, Service and Value, established over time and proven by the test of operated use and satisfaction (Jack,
Branding is a set of components with the aim of providing both functional and psychological benefits to the target consumer As such, the brand may include the following components:
This component aims to highlight the brand's functional benefits for the target customer, showcasing the product's usability, quality, and additional features that enhance its appeal.
This component encompasses symbolic value elements that provide psychological benefits to target customers, including brand personality, symbols, value propositions, unique selling propositions (USPs), and factors related to the country of origin, whether from a domestic or international company.
Below is an example of the brand scale, which contributes a small part to setting up survey questionnaires and identifying observation variables of this research
There are two scales which were public by Lacoeuilhe and Thomson and his partner in 2000 and 2005 respectively:
The Lacoeuilhe scale, developed in 2000, is rooted in Churchill's 1979 methodology Through qualitative research involving consumers, the author identified 40 observed variables, which were subsequently narrowed down to 25 after consultations with three brand experts To refine and assess the scale, the author conducted Exploratory Factor Analysis (EFA) with a sample of 120 customers, comprising both genders, followed by Confirmatory Factor Analysis (CFA) involving 311 female customers.
The exploratory factor analysis identified five observed variables that converge into a single factor, accounting for a total deviation of 56.8% The measuring scale demonstrates high reliability, indicated by a Cronbach's Alpha of 0.83 and a Joreskog value of 0.89 These results confirm that the scale is appropriate for market research data and effectively distinguishes between brand sensitivity and the risk of feeling.
I have a lot of love with this brand (GK1)
Buying products of this brand bring me so much joy and satisfaction (GK2)
I feel secure when buying products of this brand (GK3)
I have a strong attachment to this brand (GK4)
I am very attracted by this brand (GK5)
Scale of Thomson and partner (2005):
Thomson and his partner conducted a qualitative survey involving 68 university students to identify observed variables The survey featured a questionnaire with 39 adjectives, prompting students to rate how accurately these adjectives represented their chosen brand.
A 7-point scale ranging from 1 "Absolutely not correct" to 7 "Absolutely correct" was utilized in a survey conducted by Thomson and partners with 120 university students The students were asked to identify a brand they felt strongly about and select adjectives that best expressed their emotions toward it Only adjectives with an average score of 4 or higher were retained, resulting in a final list of 35 adjectives for further analysis.
Adjectives with an average score below 3.5 and a deviation under 1.5, as well as those rated by less than 10% of participants, were eliminated, resulting in 10 adjectives representing 10 observed variables for further analysis These adjectives were categorized into three factors: Affection, Passion, and Connection Affection reflects the love and emotions customers associate with a brand, Passion indicates the enthusiasm customers feel towards a brand, and Connection denotes the emotional harmony and relationship between customers and the brand The scale demonstrated high reliability, achieving a Cronbach's Alpha of 0.77.
The authors employed a second-order confirmatory factor analysis (CFA) to evaluate a multi-factor scale derived from qualitative methods, addressing theoretical limitations The findings indicate that the scale aligns well with market research data and effectively differentiates between positive attitude and satisfaction.
1 - Absolutely not correct 7 – Absolutely correct
Table 2.1.4b Scale of Thomson and partner (2005)
Statistics that describe the research sample when comparing two scales:
Overview of the consumer goods industry in Vietnam
With the third largest population in Southeast Asia, Vietnam boasts a working-age demographic of nearly 70% (ages 16-60), making it a significant market for the consumer goods industry The ongoing advancements in international economic integration and rising per capita income are fueling the growth of consumer goods in the country.
In the period of 2010 - 2014, Vietnam's economy has a high and stable growth rate (around 5-7% per year), which leads to a stable growth of consumer
Between 2014 and 2015, the beverage segment experienced significant growth, accounting for a 38% increase in total sales within the Consumer Goods sector and achieving a remarkable growth rate of 6.7% This expansion was primarily driven by beer, energy drinks, and other beverages Additionally, milk and dairy products saw a notable rise, with sales increasing by 12% in urban areas and 20% in rural regions In contrast, other product categories, particularly household care items like detergents and packaged foods, faced considerable challenges in the market.
Total sales of consumer goods sectors in Vietnam are projected to increase to
$ 140 billion by 2016 This is a great opportunity for consumer goods firms in production, market expansion, seeking growth opportunities
The Brand Footprint board prioritizes consumer behavior over brand preferences, utilizing Consumer Reach Points (CRPs) as its ranking metric CRPs innovatively assess both the percentage of households purchasing a brand and the frequency of those purchases, providing a genuine reflection of consumer choice.
Below are top 5 manufacturers were selected as the top performers: (Fastest- selling brands in Vietnam in 2018, 2018）
Unilever, Masan Consumer, and Vinamilk have consistently ranked as the top three manufacturers of the most purchased brands in both urban and rural Vietnam over the past six years In the food sector, Masan Consumer and Vinamilk dominate, while Unilever leads in non-food products Their sustained success can be attributed to a loyal consumer base and strategic factors such as a diverse product portfolio, an extensive distribution network, competitive pricing strategies, and effective communication combined with ongoing improvements.
- Nestle‟s continued to lead the CRP growth in the top 10 manufacturers in the
4 main cities and reached CRP growth of 8%, adding one to rank 8 in the rural region The good performances of brands, such as Milo, Maggi, and
La Vie contributed much to Nestle‟s success
Ajinomoto holds the second position in market rankings across urban and rural areas, significantly enhancing its reach through the popular Aji-Mayo mayonnaise brand Currently, Ajinomoto's products are accessible in over 80% of households, impacting 42,500 urban households and 330,000 rural households last year.
Vinasoy, the leading brand of soy milk, has achieved remarkable success by introducing two new product categories, resulting in the highest CRP growth among the top 10 manufacturers in rural areas With over 60 million purchases, Vinasoy's soybean milk has become a staple in half of all rural households, solidifying its position in the market.
The 10 most-purchased manufacturers in 4 main cities and rural areas in Vietnam published by Kantar World panel in the Brand Footprint 2018 report include: （Fastest-selling brands in Vietnam in 2018, 2018）
Table 2.3 Top 10 most-purchased manufacturers in 4 main cities and rural areas in Vietnam
Below are brand rankings by category: （Fastest-selling brands in Vietnam in
Unilever dominates the Top 10 ranking with 6 brands in 4 major cities and 5 brands in rural areas, achieving nearly 100% household coverage The multinational corporation effectively establishes its brand positioning by utilizing a diverse array of media channels to reach various audiences and consumer segments.
Unicharm has achieved impressive results, particularly in rural markets, with its Bobby diaper brand ranking first in the Urban 4 and capturing 37% market share in rural areas Diapers account for nearly 25% of total FMCG spending online, and Bobby's focus on enhancing online distribution is likely to draw in more potential buyers Additionally, Unicharm's Diana brand has climbed to second place in the top 10 and leads the CRP in four major cities, while also experiencing significant growth in rural areas, increasing its CRP by 15% and attracting half a million new customers.
Sensodyne is the leading brand for growth in the Health & Beauty market across four major cities, despite not ranking in the top 10 overall Recognized as a pioneer in the sensitive tooth segment, Sensodyne maintains its leading position amidst increasing competition The brand is found in approximately 14% of urban households and successfully expanded its reach by penetrating an additional 60,000 homes in 2017.
Table 2.3a Brand ranking by Health and Beauty
Unilever reinforces its dominance in the Family Care category, with three brands—Sunlight, Omo, and Comfort—ranking in the top three across both urban and rural regions Sunlight has maintained its market leadership for two consecutive years, reaching over two-thirds of Vietnamese households and continuing to draw in more buyers, particularly in rural areas where local competition is strong.
Lix, the leading laundry brand in the home care category, has successfully attracted 110,000 new buyers, achieving a remarkable 16% growth in Consumer Reach Points (CRP) This impressive growth can be largely attributed to the introduction of a line of affordable laundry products, providing urban consumers with reliable quality options.
Viet Nhat has emerged as the leading family care brand in the countryside, successfully attracting nearly 1.2 million households This paper brand has achieved remarkable growth, surpassing the top five competitors and breaking into the top ten for the first time, boasting a record 128% CRP growth.
In 2017, the family care industry experienced significant growth, outpacing the overall FMCG market, driven by enhanced living standards and better sanitary practices Family care brands are effectively addressing the demand for convenience and affordability, allowing them to penetrate more Vietnamese households.
Table 2.3b Brand ranking by Famiy care
Hao Hao is the leading brand in area of 4 main cities with the CRP growth rate of 10%, and is present in the kitchen of more than 65,000 new households in
In 2017, Hao Hao launched its new product, Hao Hao Handy cup noodles, which effectively addressed the growing demand for convenience among consumers, significantly contributing to the brand's success that year.
Nam Ngu, a leading fish sauce brand from Masan Consumer, remains the top choice for food in rural areas and holds the second position in major urban centers With over 130 million selections, Nam Ngu is favored by nearly 80% of rural households and is chosen 16 million times by more than two-thirds of urban households Alongside other prominent brands like Chinsu, Tam Thai Tu, and Kokomi, Masan Consumer has solidified its dominant position in the food industry rankings.
Overview of marketing
In 1960, McCarthy introduced a marketing concept that contrasted with the traditional production-oriented philosophy, marking the emergence of a marketing-oriented approach However, this idea was primarily theoretical and did not immediately translate into practical application.
Felton (1959) described the marketing concept as a "corporate state of mind," emphasizing that firms should prioritize customer satisfaction while achieving profitability McCarthy identified three core elements of this concept: a strong customer orientation, a cohesive organizational effort, and a focus on profit rather than merely sales Implementing the marketing concept necessitates shifts in managerial attitudes, methods, procedures, and organizational structures to align with these principles.
McCarthy emphasized that significant changes are essential across various areas, highlighting that it has taken nearly four decades for managers to recognize that customer orientation is not merely a departmental function but a fundamental philosophy that must permeate the entire organization and become ingrained in its corporate culture He introduced the marketing mix as a practical tool to implement this marketing-oriented philosophy, which has since established itself as the prevailing paradigm in the field.
In 1967, Phillip Kotler introduced the new marketing concept, emphasizing that while marketing often appears at the end of assembly lines, its true influence should begin during the design phase He critiqued the "old" marketing approach, which prioritized sales over customer satisfaction and failed to recognize the need for coordinated activities across various departments, such as advertising and marketing research This lack of unified focus, previously highlighted by McCarthy in 1960, underscored the importance of integrating marketing efforts to better meet customer needs.
The evolution of marketing has shifted from a product-centric approach to a customer-centric model In the traditional marketing concept, companies focused on their existing products and sought ways to boost sales Conversely, the modern approach emphasizes understanding customer needs—both existing and potential—and developing solutions that cater to those needs This transformation is particularly relevant in the context of Internet business, where experts like Sterne (1996, 1998) advocate for organizations to adopt a "customer glasses" perspective, envisioning the world through the eyes of their customers This shift has given rise to the electronic marketing concept, which outlines the distinct strategies required for success in the online marketplace.
The electronic marketing concept goes beyond the needs and starts from the ever changing expectations and profits are seen a measure of customer perceived value （Brọnnback and Puhakainen, 1998)
Before the advent of electronic marketing, the field began with service marketing and evolved into relationship marketing, which focused on buyer-seller interactions in industrial markets These concepts represent significant advancements in marketing orientation and customer orientation Despite their importance, the core principle of customer orientation has proven difficult for many businesses to fully embrace, as highlighted by Nestlé's CEO (Day, 1998).
The service marketing concept, developed by Grönroos and others, emerged as a response to criticisms of the traditional marketing-mix model, highlighting the unique characteristics of services compared to products Unlike products, services are intangible, cannot be stored, and are produced and consumed simultaneously, which introduces variability in quality This variability is influenced by employee satisfaction, underscoring the importance of human factors in service delivery Consequently, there is often no guarantee that the service experience will meet customer expectations.
The”old” marketing concept, the selling concept (1967)
The concept of relationship marketing emerged from a focus on the buyer-seller relationship, emphasizing that customer perceived value arises from interactions between personnel and customers (Rautainen, Kymmenen, & Valmet, 1996) Researchers recognized that the principles of service marketing could be effectively applied to industrial marketing contexts to better understand business relationships (Grünroos, 1996) Additionally, relationship marketing distinguishes itself from the traditional marketing-mix paradigm, highlighting the importance of long-term customer connections over transactional approaches (Grünroos).
1994, 1996), arguing that the traditional marketing-mix directed critical attention away from the most essential – the customer
Products Selling and Promotion Profits through sales volume
Interactive marketing Profits through customer perceived value Customer needs Integrated marketing Profits through customer satisfaction
Day (1998) emphasizes that possessing advanced technologies and business systems is insufficient for success; firms must also excel in understanding, satisfying, and retaining customers to reach their full potential This perspective is reflected in current business practices, where being market-driven has become a trend, as evidenced by annual reports and employee testimonials highlighting customer orientation within organizations.
Organizations often neglect to prioritize the customer experience, failing to recognize that every interaction with a customer represents a critical moment of truth Customer orientation should be a collective responsibility, involving everyone from the CEO to line managers and even operational staff Ironically, market researchers and marketing managers, who are expected to focus on customer insights, often have the least direct contact with customers In contrast, employees in production and R&D frequently interact with end-customers, sometimes daily Given the importance of customer care, companies must ensure that all personnel receive training in customer orientation to enhance overall service quality.
The quality of service performance and customer relationships is significantly influenced by employee satisfaction, making it essential for business success rather than merely a "feel good" initiative This article will introduce a conceptual model for customer integration, emphasizing knowledge as a crucial element in the process Customer integration involves interactions between external customers and internal customers, or employees, a concept rooted in service marketing While marketers have long recognized this, the acknowledgment of employees as internal customers is relatively novel, particularly in the fields of knowledge management and intellectual capital Understanding customer integration is vital, as it closely links competence development with customer orientation.
Overview of brand marketing
2.4.1 Definition of brand marketing: （Kotler, Armstrong, Trifts, Peggy,
Brand marketing has become a central focus in modern marketing strategies, shifting from a product-centric approach to one that emphasizes brand management Influenced by Philip Kotler's theories on product conceptualization, this evolution has been particularly evident in the consumer goods sector, where leading multinational corporations have integrated brand marketing into their core strategies and corporate governance Between 1999 and 2003, extensive research was conducted to refine brand marketing theory, culminating in 20 key principles that represent the foundational framework for brand marketing in Vietnam.
In Brand Marketing theory, a product is defined as a collection of benefits, which can be categorized into two interest groups: the interest group and the effective interest group These benefits address customer needs and are referred to as "value." Thus, while "benefit" pertains to the attributes of a product, "value" reflects the attributes of a brand.
A brand is defined by a unique set of benefits and products that incorporate distinctive elements These elements, also known as identity features, are crucial as they embody trademark concepts and legends that contribute to the brand's recognition and identity.
The Product Concept encompasses a set of benefits that fundamentally shifts our perception of the world, suggesting that every individual is essentially a product or brand This perspective highlights the synergy between branding and product development, emphasizing that marketing should focus on defining the product from the customer's viewpoint rather than relying solely on the manufacturer's conventional definitions.
2.4.2 Using marketing in establishing and developing business's brand:
For many businesses, building and nurturing a strong brand is a primary objective Some companies prioritize long-term brand development over short-term gains, recognizing that a well-established brand can lead to lasting success and customer loyalty.
The essence of a brand goes beyond just its products; it embodies the business's reputation and image in the eyes of consumers Developing a robust marketing and communication strategy is essential for businesses to strengthen their brand presence in the market and connect effectively with customers.
To establish a sustainable brand, businesses must implement a tailored marketing strategy that aligns with their unique goals This strategy is essential for expanding and developing the brand effectively While it may seem straightforward, many entrepreneurs struggle to identify the most effective approach for their specific needs.
In fact, a brand which is assessed that it‟s a successful brand needs to have these following things: （Tailor, 2018）
- Bringing feelings and emotions for consumers through the brand
- Having its own featured image
Overview of customer: （ Hitesh, 2018 ）
A customer is an individual or business that buys goods or services from a company Unlike businesses that resell products, customers purchase for personal use Their buying decisions are often influenced by promotional efforts.
Attracting customers is essential for public-facing businesses, as customers drive demand for goods and services To expand their customer base, companies frequently engage in competition through advertising and lowering prices.
Customers typically make purchases using their own funds or money from acquaintances Unlike purchasing agents who buy goods in bulk for businesses, true customers are individuals who use their personal cash or credit for transactions rather than funds from a corporate employer.
Businesses adhere to the principle that "the customer is always right," recognizing that satisfied customers are likely to remain loyal and continue purchasing To enhance customer relationships, companies frequently seek feedback to determine the need for new products or adjustments to existing offerings In today's economy, nearly everyone engages with businesses as customers, highlighting the importance of understanding customer needs Key characteristics differentiate customers from clients or vendors, emphasizing their unique role in the marketplace.
Understanding the demographics of customers is crucial for businesses aiming to refine their marketing strategies and optimize inventory By analyzing factors such as age, race, sex, ethnicity, income level, and geographic location, companies can effectively identify and target their most profitable customer segments.
Understanding the characteristics of a business's shoppers helps in creating an "ideal customer" profile, or "customer persona." This insight enables companies to strengthen relationships with existing loyal customers while also targeting new demographics to improve sales in underperforming areas, ultimately expanding their customer base for future growth.
Customer service is crucial for maintaining customer satisfaction and fostering strong seller/customer relationships Positive experiences can lead to loyalty, reflected in good reviews, referrals, and repeat business, while negative experiences can result in lost opportunities In recent years, customer service has evolved to include real-time interactions through automation, chat, social media, and text messaging, enhancing communication and support for customers.
The customer concept is a four-stage model that guides organizations in achieving growth through effective customer acquisition and retention This model serves as a valuable tool for assessing an organization's performance in customer service across both product and service markets The four stages of the customer concept provide a framework for understanding and enhancing customer relationships.
Model 2.5 The stages of customer concept
Starting Point Focus Means Ends
One to one Marketing integration and Values Chain
Profitable growth through capturing customer share, loyalty & lifetime value
To effectively reach their audience, organizations must first understand Segmentation, Targeting, and Positioning (STP) to define their customer base, which consists of individuals within a specific target group Once the customer profile is established, the organization can proceed to the next phase of its marketing strategy.
At this stage, organizations must prioritize understanding customer needs and desires, along with the value they offer Identifying what customers truly want is crucial for success To remain aligned with the ever-evolving business landscape, companies should conduct regular gap analyses and market research, ensuring they stay attuned to customer expectations.
To effectively deliver value to customers, organizations must create a cohesive Value Chain by integrating every function, from services to sales and manufacturing This interconnectedness ensures that all aspects of the organization work in harmony to enhance customer value Additionally, the integration of multiple sales channels is crucial for maximizing reach and improving customer experiences Understanding and optimizing the Value Chain is essential for organizations aiming to deliver exceptional value to their customers.
Customer share, loyalty, and lifetime value are essential concepts that define an organization's customer equity These concepts represent the final stage of customer engagement, emphasizing the importance of ensuring customer satisfaction By doing so, organizations can cultivate repeat customers and foster long-term relationships, ultimately striving to retain customers for a lifetime.
Consumer behavior
Consumer buying behavior encompasses the entire process that individuals go through when researching, purchasing, utilizing, and assessing goods and services to meet their needs It also involves how consumers make decisions regarding the allocation of their resources, such as money, time, and effort, in relation to the acquisition and use of products Ultimately, consumers seek to fulfill their personal needs through the use of various goods and services (Tran Minh Dao, 2009).
Philip Kotler (2004) emphasizes that in marketing, understanding consumer behavior is essential for identifying their needs, preferences, and buying habits Marketers analyze what consumers want to purchase, the reasons behind their buying decisions, the locations where they shop, the timing of their purchases, and the amounts they spend This knowledge is crucial for developing effective marketing strategies that encourage consumers to buy products and services.
Nowadays companies are more concerned on individual consumer behavior
Consumer behavior encompasses the study of how individuals or groups make decisions regarding the selection, purchase, use, and disposal of products, services, ideas, or experiences to fulfill their needs and desires Understanding consumer behavior provides valuable insights into the thoughts, feelings, and choices of consumers, highlighting the significance of this field in marketing and business strategies (Solomon, 1998).
） The expand view of consumer embrace much more than the study of why and what consumers use the products and services
Customers today face a challenging landscape filled with a vast array of information and product options, which significantly impact their purchasing decisions However, individual interpretations and decision-making processes vary greatly, shaped by internal consumer behaviors such as perception, attitude, and motivation, as well as external influences like family dynamics, peer pressure, and group interactions.
Philip Kotler (2004) emphasizes that marketers analyze consumer behavior to understand their needs, preferences, and purchasing habits This includes insights into what consumers want to buy, the reasons behind their purchases, the locations and timing of their buying decisions, and the amounts they are willing to spend By gathering this information, marketers can create effective strategies that encourage consumers to purchase products and services.
Consumer behavior research plays a crucial role in shaping business decision-making, as highlighted by Philip Kotler (2001) Historically, marketers gained insights into consumer preferences through direct interactions and transactions However, the expansion of businesses has led to a disconnect between marketing managers and customers, rendering sales department insights subjective Consequently, an increasing number of executives are prioritizing consumer behavior research to guide informed decision-making and create effective marketing strategies.
Product Choice Brand Choice Deliver Choice Purchase Timing
Alternative Evaluation Purchase Decision Post Purchase
The decision to buy from consumers
2.7.1 The progress of decision to buy from consumers:
According to Philip Kotler, the process of consumer buying decisions takes place through the following stages:
Figure 2.7.1 Buyer’s Decision Progress Model
The buyer decision process is collectively five stages which consumers usually follow through before making their deliberate purchase (Philip Kotler,
Consumers would often skip stages or even reverse stages, this is usually depending on the actually product and whether it is a complex or habitual buying behavior (Philip Kotler, 2008)
The initial phase of the buying decision process, known as need recognition, occurs when a consumer identifies their specific problem or need (Philip Kotler, 2008) This awareness highlights the gap between their current situation and their desired state (Pride, 2007), serving as a crucial motivator for the consumer to make a purchase.
The second stage of the consumer decision-making process, known as Information Search, involves consumers conducting research to gain deeper insights into their recognized needs This research is influenced by the consumer's motivation towards the product (Kotler, 2008) In today's digital age, consumers have various resources at their disposal, particularly the internet, which has become a primary tool for product research According to Mintel (2001), over 55% of internet users explore products online before making a purchase.
The third stage of the consumer decision-making process is the Purchase Decision, where consumers seek to fulfill their specific needs, whether basic or desired During this stage, they utilize the information gathered in the previous stage to evaluate alternative brands, ultimately narrowing down their choices to make an informed decision.
The fourth stage of the decision-making process is the actual purchase decision, where consumers must decide whether to buy the product This stage can lead to two outcomes: a successful purchase, indicating a positive decision-making process, or a change of mind regarding the product's suitability, resulting in an unsuccessful decision.
The post-purchase decision-making process occurs after a purchase is completed, heavily influenced by customer satisfaction levels, as noted by Philip Kotler (2008) This crucial final stage enables consumers to evaluate the vehicle's performance and determine if it fulfills their personal expectations and needs.
Purchasing an item can lead to two outcomes: a successful experience where the purchase feels worthwhile, or an unsuccessful one that results in discomfort, often referred to as cognitive dissonance.
2.7.2 The factors affect the decision to buy from consumers:
The factors affecting consumer behavior are grouped into four main categories (Ali, 2016):
- Age and early stage of family life cycle
- The type of personality and perception of yourself
Cultural factors, including culture, subculture, and social class, significantly influence buying behavior Hofstede (1980) defines culture as the collective programming of the mind that differentiates one group from another, encompassing knowledge, beliefs, customs, traditions, morals, and habits acquired by society This complex framework shapes how consumers think and feel, affecting their attitudes, values, personality types, religion, and material possessions (Hawkins, 2001) Hofstede (2002) identifies five dimensions of culture that further impact consumer behavior.
A culture can encompass various subcultures, which are smaller segments that share similar meanings and values These subcultures play a crucial role in transmitting beliefs, attitudes, and values across generations According to Burgess (1998), factors such as religion, race, and ethnic background significantly influence aspects like clothing, cuisine, home decor, and personal grooming.
Social classes are categorized groups that are ranked within a social hierarchy, primarily determined by an individual's income and wealth Additionally, the residential area plays a significant role in defining one's social class, as some scholars argue that where a person lives can influence their social standing.
Social factors, such as reference groups, family, roles, and status, significantly influence individual attitudes and behaviors Kotler (2008) highlights that reference groups, including inspirational groups, member groups, and opinion leaders, serve as benchmarks for lifestyle, aspirations, and habits Research indicates that these groups fulfill various roles, including initiator, influencer, decision maker, and buyer Hawkins (2001) categorizes reference groups into three influential types: normative, informational, and identification, each playing a crucial role in shaping consumer behavior.
Family is the most influential social factor, defined as a group of individuals connected by blood, marriage, or adoption who live together Engel (1995) emphasized the significance of households and families for marketers, noting that the rise of non-traditional family structures has made this area of study increasingly important.
The roles and status of individuals play a crucial role in social influence, shaped by their positions within family, workplace, social clubs, and friendships Factors such as profession, workplace hierarchy, education, family dynamics, and gender significantly impact an individual's role and status in society.
Personal factors include age, stages of life cycle, occupation, economic, condition, lifestyle, personality and self-concept These are the fundamental factors contributing to the change in preferences
Age and life cycle stages significantly influence consumer buying behavior, with distinct differences observed among children, teenagers, adults, middle-aged individuals, and seniors As people progress through various life stages—such as being young and single, a married couple, parents, empty nesters, or seniors—their preferences and purchasing decisions evolve over time.
Occupation is assumed to have a significant impact on buying behavior The individuals show a great inclination towards products and services according to their profession
The economic condition encompasses an individual's total earnings and income, which can fluctuate based on evolving income and spending habits Potential consumers are defined as those who possess both the ability and willingness to engage in purchasing decisions.
Other variables like inflation, deflation, recession etc have a direct impact on one‟s economic condition
Lifestyle encompasses a range of activities, interests, and opinions that evolve with personal factors such as age, income, life cycle, and occupation According to Johanna Fybjork (2003), individuals from similar social backgrounds or professions can exhibit vastly different lifestyles Researchers have identified eight key dimensions of lifestyle: fashion consciousness, leadership, family concerns, health consciousness, carefreeness, community consciousness, cost consciousness, and practicality Additionally, personality and self-concept play crucial roles, as personality reflects the unique psychological traits that shape consistent responses to one's environment.
Proposed model about factors affecting customer‟s purchasing decision to
The author aims to enhance theoretical frameworks by integrating insights from both local and international studies, alongside expert consultations By selecting innovative elements, a tailored research model will be proposed that aligns with the specific topic of interest This contribution seeks to advance the understanding of customer buying behavior and consumer purchasing decisions.
As a consumer and aspiring manager, the author is keenly interested in understanding consumer psychology and perceptions, particularly in relation to selecting qualified and suitable brands within the consumer goods industry This insight not only aids consumers in making informed choices but also assists businesses in attracting more customers and expanding their market share.
Figure 2.9 Proposed Research Model (Theoretical Model)
Decision to choose consumer goods brand
Based on Philip Kotler's theory of consumer behavior and empirical research on purchasing decisions influenced by perceived value models from Sheth et al (1991), Sweeney et al (2001), Sanchez et al (2006), and Braustein-Minkove et al (2011), this study focuses on the characteristics of the consumer goods industry in Ho Chi Minh City It proposes a model identifying six key factors that influence consumer purchasing decisions for brand goods: Quality Value, Price Value, Social Value, Emotional Value, Personnel Value, and Distribution Density.
Quality value encompasses the economic advantages gained from a product's attributes, including its nature, utility, and conditions of use It highlights the functionality that the product is designed to deliver, as well as the benefits associated with its use and ownership.
Price value refers to the evaluation of price aspects based on consumption experiences It highlights that the price aligns with the quality of the product, remains relatively stable, and is competitive in the market Additionally, the pricing is appropriate for the income level of the customer, ensuring accessibility and satisfaction.
Social value reflects the pride, character, and credibility that consumers derive from products, which society acknowledges and promotes In Ho Chi Minh City, consumer demand and satisfaction vary significantly, influenced by individual characteristics such as gender, age, education, occupation, and income These factors play a crucial role in shaping the preferences and brand choices of customers in the region.
Emotional value is the emotional state of the customer when receiving and using products and after-sales service of the supplier
Personnel value: expressed in the level of knowledge, responsibility, devotion, and kindness of employees working at stores or supermarkets towards customers
Distribution value: refers to the economic benefits through the arrangement, installation at dealers such as location, equipment, organization, arrangement, decoration
H1: Quality value has a positive relationship with customers‟ purchasing decision to consumer goods brand in HCMC
H2: Price value has a positive relationship with customers‟ purchasing decision to consumer goods brand in HCMC
H3: Social value has a positive relationship with customers‟ purchasing decision to consumer goods brand in HCMC
H4: Emotional value has a positive relationship with customers‟ purchasing decision to consumer goods brand in HCMC
H5: Personnel value has a positive relationship with customers‟ purchasing decision to consumer goods brand in HCMC
H6: Distribution value has a positive relationship with customers‟ purchasing decision to consumer goods brand in HCMC
H7: There are differences in factors affecting customers‟ purchasing decision to consumer goods brand in HCM City according to personal customers‟ characteristics.