An investigation of the factors that affect purchase intention toward organic foods among Vietnamese consumers :Master dissertation - Major: Marketing

United Kingdom, April 2017

An investigation of the factors that affect purchase intention

toward organic foods among Vietnamese consumers.

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MASTER DISSERTATION

Course Title: MSC INTERNATIONAL MARKETING

Module Title: DISSERTATION

Module Code: 44-704461

Module Leader: SCOTT JONES

Wordcount: 12462

Author: Thu Thao Tran

ID: B7001258

MSc International Marketing

Supervisor: Shalini Vohra

PhD, MBA, FHEA

Senior Lecture in Marketing

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Abstract

The study aims to investigate the factors that affect consumers’ purchase intention towards organic

foods in an emerging market – Vietnam. After reviewing the previous studies with the relevant

literature, a theoretical research framework was developed based on nine hypothesises, including

health consciousness, environmental consciousness, animal welfare, ethical issues, quality and

taste, premium price, availability, certificate and labels and sufficient marketing. Besides that,

demographic characteristics consists of gender, age, number of children, income and education

were also examined to explore whether there is an exist of significant difference between groups

of customers towards intention of buying organic foods. 277 responses were collected from the

internet and also supermarkets, grocery stores to complete the questionnaire. A new adjusted

research model was developed after the Exploratory Factor Analysis test with only seven factors in

comparison with 9 factors at the first place. As a result, six out of seven hypothesises were accepted.

Particularly, ethical concern had the strongest effect followed by health consciousness while

premium price was not found to be significantly related to intention towards purchase organic

foods. Moreover, this study confirmed the significant differences in demographic characteristic

towards consumer’s purchase intention of buying organic foods.

Keywords: Consumers with the presence of children, Purchase intention, Organic foods, Vietnam,

Health consciousness, Environmental consciousness, Animal welfare, Ethical issues, Quality and

taste, Premium price, Availability, Certificate and labels, Sufficient marketing.

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Acknowledgement

Doing Master dissertation was the one of the most challenging but inspiring task that I have ever

accomplished. My knowledge has been enriched through the whole process of this work. Besides,

it could not finish unless there were a lot of supports from so many of people who I wish to dedicate

my most gratefulness.

Firstly, I would like to express my special thanks of gratitude to my supervisor, Dr. Shalini Vohra

for her supports and her patient guidance during my journey doing dissertation. Moreover, I could

not be completely achieved my goals without the support from my Vietnamese friends who gave

me beneficial advices for the pilot study to lead the study to the right track, also a group of students

in University of Economic Ho Chi Minh City to help me collect the respondents in supermarkets

and grocery store. Finally, I also like to thank my family and friends who always encourage and

support me in finalizing this research within the limited time frame.

Thu Thao Tran

Sheffield, 27 April 2018

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Table of Contents

Acknowledgement........................................................................................................................... 3

Table of Contents............................................................................................................................ 4

Table of Figures.............................................................................................................................. 5

Chapter 1 Introduction .................................................................................................................. 7

Chapter 2 Literature Review....................................................................................................... 11

2.1 The Purchase Intention.......................................................................................................... 11

2.2 Consumers’ Perception Towards Organic Foods ................................................................. 11

2.3 Factors that Affect Consumers’ Purchase Intention towards Organic Foods....................... 12

2.3.1 Health Consciousness..................................................................................................... 12

2.3.2 Environmental Consciousness........................................................................................ 13

2.3.3 Taste and Quality............................................................................................................ 15

2.3.4 Animal Welfare .............................................................................................................. 16

2.3.5 Ethical issues .................................................................................................................. 16

2.3.6 Premium Price ................................................................................................................ 17

2.3.7 Availability ..................................................................................................................... 18

2.3.8 Organic Certification and Labels.................................................................................... 19

2.3.9 Sufficient Marketing....................................................................................................... 19

2.4 Difference of Demographic in Purchase Intention ............................................................... 20

2.5 The research framework........................................................................................................ 22

Chapter 3 Methodology ............................................................................................................... 23

3.1 Key Concepts of Research .................................................................................................... 23

3.1.1 Research Approach......................................................................................................... 23

3.1.2 Research Strategy ........................................................................................................... 23

3.1.3 Data Source..................................................................................................................... 23

3.2 Data Collection Method ........................................................................................................ 24

3.3 Sampling ............................................................................................................................... 25

3.3.1 Sampling Frame.............................................................................................................. 25

3.3.2 Sampling Technique ....................................................................................................... 25

3.4 Data Analysis Method........................................................................................................... 26

3.5 Operational Definitions......................................................................................................... 26

Chapter 4 Findings....................................................................................................................... 27

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4.1 Frequencies ........................................................................................................................... 27

4.2 Descriptive Statistics............................................................................................................. 29

4.3 Reliability.............................................................................................................................. 30

4.4 Exploratory Factor Analysis (EFA)...................................................................................... 31

4.4.1 Factor Analysis............................................................................................................... 31

4.4.2 Adjusted Research Model............................................................................................... 33

4.5 Validity.................................................................................................................................. 35

4.6 Linear Regression ................................................................................................................. 35

4.7 Independent t-Test and One-way analysis of variance ......................................................... 38

Chapter 5 Discussion.................................................................................................................... 42

5.1 Factors that affect consumers’ purchase intention towards organic foods........................... 42

5.1.1 Health Consciousness..................................................................................................... 42

5.1.2 Environmental Consciousness........................................................................................ 43

5.1.3 Quality and Taste............................................................................................................ 43

5.1.4 Ethical Issues and Animal Welfare ................................................................................ 44

5.1.6 Availability and Sufficient Marketing............................................................................ 46

5.1.7 Certificate and Labels..................................................................................................... 46

5.2 Differences in the consumers’ purchase intention of organic foods according to their

demographic variables ................................................................................................................ 47

Chapter 6 Conclusion, Limitation and Implication .................................................................. 49

6.1 Conclusion ............................................................................................................................ 49

6.2 Limitation.............................................................................................................................. 49

6.3 Implication ............................................................................................................................ 50

Reference ....................................................................................................................................... 51

Appendix ....................................................................................................................................... 64

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Table of Figures

Table 1: Demographic Frequencies................................................................................................ 28

Table 2: Cronbach’s Alpha............................................................................................................. 30

Table 3: KMO and Bartlett's Test................................................................................................... 31

Table 4: Rotated Component Matrixa

............................................................................................. 32

Table 5: KMO and Bartlett's Test for Purchase Intention.............................................................. 33

Table 6: Component Matrixa

.......................................................................................................... 33

Table 7: Pearson Correlation Analysis.......................................................................................... 35

Table 8: Adjusted R Square and Durbin-Watson........................................................................... 36

Table 9: ANOVAa

.......................................................................................................................... 36

Table 10: Coefficientsa

................................................................................................................... 37

Table 11: Linear Regression Analysis Result ................................................................................ 38

Table 12: Group Statistics and Independent Samples Test ............................................................ 38

Table 13: One-way ANOVA test result of Demographic variables............................................... 39

Table 14: LSD Test for Age ........................................................................................................... 40

Table 15: LSD Test for Number of children .................................................................................. 40

Table 16: LSD Test for Income...................................................................................................... 41

Table 17: LSD Test for Education ................................................................................................. 41

Figure 1: Research Model .............................................................................................................. 22

Figure 2: Adjusted Research Model............................................................................................... 34

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Chapter 1 Introduction

1.1 Background of Study

Every day people around the world are making a shift towards healthier and more environmental

consciousness about what they consume, and this trend is predicted to develop in the future under

the prior concerns of consumers in purchasing products (Salleh et al., 2010). Particularly, when it

comes to foods and they tend to continuously increase interests in nutrition, health, related￾environmental issues (BrčićStipčević et al., 2013). Also, these factors are appeared as the main

drivers for customers to consume organic foods (Chen, 2007, 2009; Yin et al., 2010).

According to existing studies, foods are categorised as “organic” if they do not contain artificial

synthesized fertilizers, pesticides, hormones, poultry feed additives and foods that are not

intensively produced and are grown as natural (Jia et al., 2002; Makatouni, 1999; Davies et al.,

1995). Thus, consumers might perceive organic foods and beverages as natural and more

sustainable. This led a growing demand for organic ranges (Euromonitor, 2017). Euromonitor

(2017) reported that the organic foods and drinks valued at $37 billion at a global level. Although

the figure made up a small part of the health and wellness market, it represents potential growth

depended on the evolution of customers’ priorities towards natural foods and beverages

consumption as well as the growing concern in social and environmental responsibilities, which

will keep driving a potential development for this sector over the forecast period (Euromonitor,

2017).

The record of boosting organic sales in developed countries, reached $37 billion in 2016 and

increased 36% over the review period, particularly North America and Western Europe are two

largest markets dominating the organic space (Euromonitor, 2017). Besides, MarketLine (2017)

reported that organic foods market has seen rapid growth in Asia Pacific countries during the period

between 2011 and 2016. It grew by 21.9%, reached a value of 11,896 million USD in 2016. This

figure is predicted to increase by 178.9% in 2021. The forecast shows that the emerging countries

are following this footstep in which China is a main contributor as a key spot for organic market,

boosting the development in Asia Pacific and positioning the region one of the largest growth

markets over the forecast period (Euromonitor, 2017). On the research perspective, there are

numerous studies of organic foods were conducted in Asia Pacific, most of them in China, Taiwan,

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Indonesia, Thailand, India, etc (Chen, 2007; Irianto, 2015; Mehra & Ratna, 2014; Shaharudin et

al., 2010). Generally, the results indicated that consumers in Asia Pacific countries have been

paying stronger intention and higher awareness of organic foods. However, limited research about

organic food has been conducted in Vietnam.

Regarding Vietnam, food safety is becoming an alarming issue when the country reported 139 cases

of food poisoning and approximately 120,000 units found food safety violations in 2017 for only

Hanoi city (Viet Quality, 2018) compared to 129 cases and 57,000 units respectively in 2016 for

the whole country (Thanh Nien, 2017). Consequently, Vietnamese consumers are taking greater

care selecting foods they consume because they keep worrying about whether or not the food is

safe for their health. Euromonitor (2016) reported that in Vietnam “media outlets frequently report

cases of terminal diseases, particularly cancers, which are associated with long-term consumption

of unsafe food”. This might lead an increasing number of consumers have turned to “cleaner” foods

(Euromonitor, 2016). Whereas organic farming uses animal waste, biological fertilizer and natural

pesticide, traditional farming depends on synthetic chemicals and antibiotics (Magkos et al., 2006).

Thus, organic foods are considered to be environmentally friendly as well as less likely to induce,

help to reduce human disease (Organic food dictionary, 2007). This leads to being paid attention

by consumers due to its natural alternatives (Williams and Hammitt, 2000).

1.2 Problem Statement

Vietnamese consumers have started to concern about “clean” foods because of numerous food

safety scandals in recent years and to seek out “cleaner” food sources including organic foods.

However, despite the demand is estimated higher than the past, organic foods consumption among

Vietnamese consumers is still limited (Euromonitor, 2016). The totals of organic consumption in

Vietnam market stays at only about $2 million per year (Organic Trade Association, 2017). Earlier

studies stated that the main reasons behind are usually high price, lack of availability, limited

choice, lack of trust and perceived value, which prevent organic food consumption (Tarkiainen &

Sundqvist, 2005; Chen, 2007; Irianto, 2015). These factors might affect purchase intention of

consumers towards organic foods. Therefore, understanding the purchase intention of organic foods

will be an essential element which can contribute to the growth of organic market in future.

In Vietnam, organic foods seem to be hard to access is probably because they are almost sold in

supermarkets, convenience stores or corporate distribution networks (Euromonitor, 2017). These

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distribution channels are only more popular in first-tier cities like Ho Chi Minh and Hanoi while

the majority of Vietnamese consumers are unfamiliar with the concept of such products

(Euromonitor, 2017). Therefore, organic foods haven’t been widely available with very limited

portfolios. Besides that, consumers’ demand for organic foods could been undermined by the

higher prices in comparison with standard alternatives. Lack of reliable information about organic

foods has also led to the feeling of uncertainty, which could be elaborated as a state of possessing

information regarding a problem (Vieira, 2008) and thereby influence their purchase intention

(Shiu et al., 2011; Thøgersen, 2007).

According to Lewin (1943, 1951), several specific frames involved in human food choice includes

taste, health, social and cost. Similarly, Rappoport et al. (1993) concluded these elements but added

more other factors which focus on cognitive and valuable motivations involved in consumers’ food

choice. The food choice progress of consumer is such a complex function of the multitude of effects

(Furst et al., 1996). Not only sensory aspects of foods including taste, odour and texture

characteristics but also the influences of non-food influences including cognitive information,

environmental and social factors (Eertmans et al., 2001). Regarding these studies, purchase

intention towards organic foods could be affected by individual and social factors. For example,

organic foods are considered as an answer as the perception of the healthy and safe products, not

only for human but also less damaging to the environment (Ureña et al., 2008). Ethical and moral

are also reasons for purchasing organic foods (Worcester, 2000; Morris, 1996). Additionally, the

consumers’ perception could be varied by the difference in demographic characteristics in terms of

age, gender and income (Magnusson et al., 2001); for instance, the higher likelihood of organic

food purchase was affected by the level of disposable income, and presence of children (Davies et

al., 1995).

Customers with the presence of children in their household are especially incorporated in this study

because they have presented a strong attitude towards purchasing organic foods (Canavari et al.,

2002; Soler et al., 2002) and are more likely to purchase organic foods (Thompson and Kidwell,

1998). Moreover, Davies et al. (1995) indicated that the presence of children is one of the most

important determinants in explaining and predicting their demand for organic product. From these

findings, consumers with presence of children in their household are primarily recruited for this

study.