Influencing factors to buying decision of cement product for housing construction in ho chi minh city master project in business administration

TRệễỉNG ẹAẽI HOẽC Mễ TP.HCM
HO CHI MINH CITY OPEN UNIVERSITY

UNIVERSITE LIBRE DE BRUXELLES
SOLVAY BUSINESS SCHOOL

MBAVB1

TRAN CAO TUAN

INFLUENCING FACTORS TO BUYING DECISION OF
CEMENT PRODUCT FOR HOUSING CONSTRUCTION
IN HO CHI MINH CITY

MASTER PROJECT
MASTER IN BUSINESS ADMINISTRATION
(PART-TIME)

Ho Chi Minh City
(2010)


MBAVB - MASTER PROJECT – TRAN CAO TUAN

ACKNOWLEDGMENT OF COMMITMENT

I, Tran Cao Tuan, would like to confirm that I have prepared and conducted this
“Influencing factors to buying decision of cement product for housing
construction in Ho Chi Minh City” as the final project of MBAVB program.

i

MBAVB - MASTER PROJECT – TRAN CAO TUAN

ACKNOWLEDGEMENT

I sincerely express my deep gratefulness to Professor Michele Allele of
Solvay University in Belgium and Doctor Tran Anh Tuan, the program codirector,

who

have

whole-heartedly

organized

the

Vietnam-Belgium

management MBAVB1 course successfully.

I would like to express my sincere gratitude to Dr. Nguyen Van Phuc,
research advisor for the valuable guidance, constructive comments and
encouragement through out the research study.

Especially, I would like to give my special thanks to my family who enabled
me to complete this project.

Ho Chi Minh City, 30th December, 2010
Tran Cao Tuan

ii


MBAVB - MASTER PROJECT – TRAN CAO TUAN

TABLE OF CONTENTS

Page
LIST OF TABLES

x

LIST OF FIGURES

xii

LIST OF ABBREVIATION

xiii

ABSTRACT

01

CHAPTER 1: INTRODUCTION

02

1.1 Problem statement

02

1.2 Research objective

02

1.3 Scope of research

02

1.4 Research methodology

03

1.5 Structure of the project

03

CHAPTER 2: LITERATURE REVIEW

05

2.1 Definition

05

2.2 Buying decision process

05

2.2.1 Buying roles

05

2.2.2 Buying behavior

06

2.3 Stages of the buying decision process

08

2.3.1 Problem recognition

09

2.3.2 Information search

09

2.3.3 Evaluation of alternatives

10

2.3.4 Purchase decision

11

2.3.5 Post purchase behavior

12

v


MBAVB - MASTER PROJECT – TRAN CAO TUAN

2.4 Purchase cases

13

2.5 Influcing buyer behaviour

14

2.5.1 Cultural factors

15

2.5.2 Social factors

16

2.5.3 Personel factors

16

2.5.4 Psychological factors

18

2.6 Selection criteria

18

2.7 Proposed research model

19

CHAPTER 3: RESEARCH DESIGN

21

3.1 Research methodology

21

3.1.1 Qualitative research

21

3.1.2 Quantitative research

22

3.2 Result of qualitative research

23

3.3 Quantitative research

24

3.3.1 Setting up, building and evaluating the scale of measurement

24

3.3.1.1 Scale of variables relative to willingness of buying cement

24

3.3.1.2 Scale of the other groups of variables

24

3.3.2 Evaluating the scale of measurement and filtering data gathered
from questionnaire

26

3.3.2.1 Evaluating the scale of measurement

26

3.3.2.2 Filtering data gathered from questionnaire

26

3.3.3 Data analysis process

27

3.3.4 Size of sample

28

CHAPTER 4: OVERVIEW OF CEMENT MARKET IN VN

29

4.1 Overview of Vietnamese economic environment

29

vi


MBAVB - MASTER PROJECT – TRAN CAO TUAN

4.2 Overview of cement industry

31

4.3 Market share

33

4.4 Cement distribution system

35

CHAPTER 5: ANALYSIS OF RESEARCH DATA & RESULTS

37

5.1 Respondent’s information

37

5.2 Descriptive statistics result of quantitative variables

38

5.3 Reliability statistics (Cronbach’s Alpha)

39

5.3.1 Reliability statistic Cronbach’s Alpha for the group of variables
relative to brand name of product

41

5.3.2 Reliability statistic Cronbach’s Alpha for the other groups of
variables

41

5.4 Exploratory factor analysis (EFA)

44

5.5 Paired-Samples T Test

47

5.6 Result analysis

50

CHAPTER 6: CONCLUSIONS & RECOMMENDATIONS

53

6.1 Conclusions

53

6.2 Recommendations

53

6.3 The strength, weakness, limitation of this study and
recommendation for future study

55

REFERENCES

57

1. English Language Sources

57

2. Vietnamese Language Sources

60

APPENDIX

61

Appendix 1: Discussion framework form

61

Appendix 2: Questionnaire for customer

62

vii


MBAVB - MASTER PROJECT – TRAN CAO TUAN

Appendix 3: Reliability statistics results (Cronbach’s Alpha)

66

Appendix 4: Result of EFA analysis

69

Appendix 5: Result of Paired-Samples T Test

72

viii


MBAVB - MASTER PROJECT – TRAN CAO TUAN

LIST OF TABLES

Page
Table 2.5:

Stages in family life cycle

16

Table 2.6:

Important level of criteria

18

Table 3.1:

Scale of the other groups of variables

25

Table 4.1:

Urbanization in Vietnam (1990-2010)

30

Table 4.2:

Income growth of Vietnamese

30

Table 4.3:

Cement demand in 03 areas of Vietnam

32

Table 4.4:

Cement consumption per capital

33

Table 4.5:

Market share of main cement manufactures

34

Table 4.6:

Cement consumption by Southern market area

34

Table 4.7:

Cement Distribution system

36

Table 5.1:

Age of respondents

37

Table 5.2:

Sex of respondents

37

Table 5.3:

Descriptive Statistics

38

Table 5.4:

Summary of initial groups of variables will be analyzed

39

Table 5.5:

Results of reliability statistics for variables relative to brand 41
name of product

Table 5.6:

Results of reliability statistics for other groups of variables

42

Table 5.7:

Summary of groups of variables after rejecting some variables

42

in the stage of reliability statistics

Table 5.8:

EFA analysis

44

Table 5.9:

Groups of factors after EFA analysis

46

ix


MBAVB - MASTER PROJECT – TRAN CAO TUAN

Table

Descriptive Statistics of new factors by descending mean

47

Results of Paired-Sample T Test comparing with Mean

48

Summary of results of Paired-Sample T Test

49

Result of Paired-Sample T Test

50

5.10:
Table
5.11:
Table
5.12:
Table
5.13:

x


MBAVB - MASTER PROJECT – TRAN CAO TUAN

LIST OF FIGURES

Page
Figure 2.1: Model of buyer behaviour

06

Figure 2.2: Four types of buying behavior

07

Figure 2.3: Five-stage Model of the Consumer Buying Process

08

Figure 2.4: Steps between evaluation of alternatives and a purchase 11
decision
Figure 2.7: Proposed research model

19

Figure 3.2: Data analysis process

27

xi


MBAVB - MASTER PROJECT – TRAN CAO TUAN

LIST OF ABBREVIATION

HCMC:

Ho Chi Minh City

EFA:

Exploratory Factor Analysis

FDI:

Foreign Direct Investment

GDP:

Gross Domestic Product

OD

Official Distributor

US$:

US dollar

xii


MBAVB - FINAL PROJECT – TRAN CAO TUAN

ABSTRACT
Cement is one of the important construction materials. The demand of cement is
increasing rapidly because the development of housing construction in
Hochiminh city is increasing, that is the aim of this research to know the
important factors influencing decision making in buying cement for housing
construction as well as infrastructure in Hochiminh city.

This research “ Influencing factors to buying decision of cement product for
housing construction in HCMC” aims at analyzing factors influencing decision
making in buying cement. The results have 06 groups of influencing factors.
These are Brand name, quality, customer services, price, delivery service,

manufacturer ‘s capacity.

After finding out groups of influencing factors, Paired-Samples T Test is used to
assess the influence level of these groups. Based on the results, we can conclude
that important level of these groups from highest to lowest : Price, Delivery
service, Quality, Brand name, Customer service and Manufacturer ‘s capacity.

1


MBAVB - FINAL PROJECT – TRAN CAO TUAN

CHAPTER 1

INTRODUCTION
1.1 Problem Statement
Cement is one of the important construction materials. The development of
housing construction in HCMC has increased very quickly at present. Therefore,
the demand of cement as well as other construction material is increasing
rapidly. Demand of cement in 2009 was 45.5 Mil ton and 2010 is about 51 Mil
ton (11% increased). With severe competition in cement business, it is necessary
to know which are the most important factors influencing customer’s decision in
buying cement for housing building. So, the objective of this research is to find
out these factors.

1.2 Research objectives
To find out important factors influencing customer decision.
To recommend some solutions for cement manufacturers to meet customer‘s
requirement as well as for new retailers to select better cement manufacturer.

1.3 Scope of research
The object of study is cement retailers and small contractors in HCMC.
The ones chosen for interviews are those who are the owner and key person who
made decision or have influence to buy cement for end user (the owner of
house). Because cement product is normally decided by contractor and /or
retailer. Therefore, they are represented as customer. Limit of research place is

2


MBAVB - FINAL PROJECT – TRAN CAO TUAN

within HCMC and not big contractor such as state contractor, corporation (as
organization buyers).

1.4 Research methodology
Desk research : Collecting data as internal data base through public sources
such as internet, news paper, relevant books and previous related research.
Survey research : There are two stage as follow

Qualitative research : face-to-face discussion method, the sample size is from 5
to 8 persons. From the result of the qualitative research, the researcher finds out
elements which are needed to modify initial model (if necessary) so that the
official model is used to design a questionnaire for the quantitative research.

Quantitative research : This research is done by questionnaires in which the
result are for analyzing all factors and figure out the level of influencing each
factors. This research is carried out by SPSS software 16.0

1.5 Structure of the project

There are 06 chapters as follow :
Chapter 01: Introduction
This chapter provides the problem statement in order to make this research. It
also provides the methodology, objective and scope of this research.

3


MBAVB - FINAL PROJECT – TRAN CAO TUAN

Chapter 02: Literature review
This chapter provides the understanding of the concepts of customer behavior
and theories that can propose model research for the study “Influencing factors
to buying decision of cement products for housing construction in HCMC”

Chapter 03: Research design
This chapter provides the implementation of design the research, preliminary
research result and research sample.

Chapter 04 : Overview of Cement market in Vietnam
This chapter provides general information about Vietnamese environment such
as economic development situation, demographic factors (average income, GDP)
and overview of development of cement industry as well as market share.

Chapter 05: Analysis of research data and result
This chapter provides analysis result through Descriptive Statistics, Exploratory
Factor Analysis, Reliability evaluation through Cronbach ‘s Alpha, Pair T Test.

Chapter 06: Conclusions and recommendations
From the research result, this chapter provides the conclusion and some

recommendations of some solution and proposes some suggestion which is
needed to set up new retailer in near future. This chapter also mentioned the
limitation of this project.

4


MBAVB - FINAL PROJECT – TRAN CAO TUAN

CHAPTER 2

LITERATURE REVIEW
2.1 Definition
According to Richard L. Sandhusen (2000, p. 218), Consumer behavior is the
study of when, why, how, and where people do or do not buy products.

Belch GE and Belch MA(2007, p. 105) define consumer behavior as 'the process
and activities people engage in when searching for, selecting, purchasing, using,
evaluating, and disposing of products and services so as to satisfy their needs and
desires'.

According to Philip Kotler (2002, p. 200), We can distinguish five roles people
play in a buying decision : Initiator : the person who first suggests the idea of
buying the product or service. Influencer : the person whose view or advice
influences the decision. Decider : the person who decides on any component of a
buying decision (whether to buy, what to buy, how to buy and where to buy).
Buyer : the person who makes the actual purchase. User : the person who
consumes or uses the product or services.

2.2 Buying decision process

2.2.1 Buying roles
According to Philip Kotler (2002, p. 200), it is easy to identify the buyer for
many products. In the United State, men normally chose their shaving equipment

5


MBAVB - FINAL PROJECT – TRAN CAO TUAN

and women chose pantyhose. But even here marketer must be careful in making
their targeting decisions because buying roles change.

2.2.2 Buying behavior
According to Philip Kotler (2002, p. 182), the field of consumer behavior studies
how individuals, groups and organizations select, buy, use and dispose of goods,
services, ideas or experience to satisfy their needs and desires. Understanding
consumer behavior and “knowing customers” is never simple. Customers may
say one thing but they do another thing, they may not be in touch with their
deeper motivations. They may respond to influences that change their minds at
the last minute. Consumer ‘s buying behavior is influenced by cultural, social,
personal and psychological factors.
According to Philip Kotler (2002, p. 183), the starting point for understanding
buyer behavior is the stimulus –response model shown in Figure 2.1 below:
Figure2.1: Model of buyer behavior

Marketing
stimulate
Product
Price
Place

Promotion

Other
stimulate
Economic
Technological
Political
Cultural

Buyer's
characteristics
Cultural
Social
Personal
Psychological

6

Buyer's
decision process
Information search
Evaluation of
alternatives
Purchase decision
Postpurchase
behavior

Buyer's
decision
Product choice

Brand choice
Purchase timing
Purchase amount


MBAVB - FINAL PROJECT – TRAN CAO TUAN

Refer to the above figure 2.1, customer decision making varies with the type of
buying decision. The decisions to buy toothpaste, a tennis racket, a personal
computer, and a new car are all different. Complex and expensive purchases are
likely to involve more buyer deliberation and more participants. Henry Assael
distinguished four types of customer buying behavior, based on the degree of
buyer involvement and the degree of differences among brands.(2.1) (see Figure
2.2).
Figure 2.2: Four types of buying behavior
High involvement

Significant differences

Complex buying behavior

between Brands

Low involvement

Variety-seeking buying
behavior

Few differences between

Dissonance-reducing

Brands

buying behavior

Habitual buying behavior

(Source: modified from Henry Assael, (1987) “Consumer behavior and Marketing action”
by Wadsworth, Inc.)

Philip Kotler (2002, p. 201) said that Complex buying behavior involves a threestep process. First, the buyer develop beliefs about the product. Second, he or
she develops attitudes about the product. Third, he or she make a thoughtful
choice. Consumers engage in complex buying behavior when they are highly
involved in a purchase and aware of significant differences among brands. This
is usually the case when the product is expensive, bought infrequently, risky and
highly self-expressive.

7


MBAVB - FINAL PROJECT – TRAN CAO TUAN

2.3 Stages of the buying decision process
Philip Kotler, (2002, p. 204), “the model in Figure 2.3 implies that consumers
pass through all five stages in buying a product, but this is not the case:
Consumers may skip or reverse some stages. A woman buying her regular brand
of toothpaste goes directly from the need for toothpaste to the purchase decision,
skipping information search and evaluation. However, we will use the model in
Figure 2.3 because it captures the full range of considerations that arise when a

customer faces a highly involving new purchase” (2.2)
Figure 2.3: Five-stage Model of the Consumer Buying Process
Problem regconition
Information search
Evaluation of
alternatives
Purchase decision

Postpurchase
behavior

Philip Kotler, (2002, p. 202) “How can marketers learn about the stages in the
buying process for their product? They can think about how they themselves
would act (introspective method). They can interview a small number of recent
purchasers, asking them to recall the events leading to their purchase
(retrospective method). They can locate consumers who plan to buy the product
and ask them to think out loud about going through the buying process
(prospective method); or they can ask consumers to describe the ideal way to buy

8


MBAVB - FINAL PROJECT – TRAN CAO TUAN

the product (prescriptive method). Each method yields a picture of the steps in
the process”.

2.3.1 Problem recognition
Philip Kotler, (2002, p. 204), the buying process start when consumer recognizes
a problem or need.

Belch, GE and Belch, MA (2007 p. 107-112), problem recognition results when
their is a difference between one's desired state and one's actual state.
Consumers are motivated to address this discrepancy and therefore they
commence the buying process. Sources of problem recognition include: out of
stock, dissatisfaction, needs/wants, related products/purchases, marketer
induced, new products.

2.3.2 Information search
Once the consumer has recognized a problem, they search for information on
products and services that can solve that problem.

Belch, GE and Belch, MA (2007, p. 112-4), they explain that consumers
undertake both an internal (memory) and an external search. Sources of
information include: personal sources, commercial sources, public sources,
personal experience.

Philip Kotler, (2002, p. 204), said “An aroused customer will be inclined to
search for more information. We can distinguish between two levels of arousal.
The milder search state is called heightened attention. At this level a person

9


MBAVB - FINAL PROJECT – TRAN CAO TUAN

simply becomes more receptive to information about a product. At the next
level, the person may enter an active information search: looking for reading
material, phoning friends, and visiting stores to learn about the product”.

Philip Kotler, (2002, p. 204), “the relative amount and influence of these
information sources vary with the product category and the buyer’s
characteristics. Generally speaking, the consumer receives the most information
about a product from commercial sources – that is, marketer-dominated sources.
However, the most effective information comes from personal sources. Each
information source performs a different function in influencing the buyingdecision. Commercial information normally performs an informing function, and
personal sources perform a legitimizing or evaluation function”.

“Through gathering information, the consumer learns about competing brands
and their features. The individual consumer will come to know only a subset of
these brands (awareness set). Some brands will meet initial buying criteria
(consideration set). As the person gathers more information, only a few will
remain as strong contenders (choice set). The brands in the choice set might all
be acceptable. The person makes a final choice from this set.”(2.3)

2.3.3 Evaluation of alternatives
Philip Kotler, (2002, p. 205) said “How does the consumer process competitive
brand information and make a final value judgment? There is no single process
used by all consumers or by one consumer in all buying situations. There are
several decision evaluation processes. First, the consumer is trying to satisfy a
need. Second, the consumer is looking for certain benefits from the product

10


MBAVB - FINAL PROJECT – TRAN CAO TUAN

solution. Third, the consumer sees each product as a bundle of attributes with
varying abilities for delivering the benefits sought to satisfy this need. The
attributes of interest to buyers vary by product”.

2.3.4 Purchase decision
Philip Kotler, (2002, p. 207), “In the evaluation stage, the consumer forms
preferences among the brands in the choice set. The consumer may also form an
intention to buy the most preferred brand. However, two factors can intervene
between the purchase intention and the purchase decision “(2.4) (see figure 2.4)
Figure2.4 : Steps between Evaluation of Alternatives and a Purchase Decision

Attitudes of
others
Evaluation of
alternatives

Purchase
Intention

Purchase
Decision
Unanticipated
situational
factors

The first factor is the attitudes of others. The extent to which another person’s
attitude reduces one’s preferred alternative depends on two things: (1) the
intensity of the other person’s negative attitude toward the consumer’s preferred
alternative and (2) the consumer’s motivation to comply with the other person’s
wishes(2.5). The more intense the other person’s negativism and the closer the
other person is to the consumer, the more the consumer will adjust his or her
purchase intention. The converse is also true: A buyer’s preference for a brand

11


MBAVB - FINAL PROJECT – TRAN CAO TUAN

will increase if someone he or she respects favors the same brand strongly. The
influence of others becomes complex when several people close to the buyer
hold contradictory opinions and the buyer would like to please them all”.

“Related to the attitudes of others is the role played by infomediaries who
publish their evaluations. Consumers are undoubtedly influenced by these
evaluations. A consumer’s decision to modify, postpone, or avoid a purchase
decision is strongly influenced by perceived risk .(2.6) The amount of perceived
risk varies with the amount of money at stake, the amount of attribute
uncertainty, and the amount of consumer self-confidence. Consumers develop
routines for reducing risk, such as decision avoidance, information gathering
from friends, and preference for national brand names and warranties.
Marketers must understand the factors that provoke a feeling of risk in
consumers and provide information and support to reduce the perceived risk”.

“In executing a purchase intention, the consumer may make up five purchase
sub-decisions: a brand decision, vendor decision, quantity decision, timing
decision, and payment-method decision. Purchases of everyday products involve
fewer decisions and less deliberation. For example, in buying sugar, a consumer
gives little thought to the vendor or payment method”.

2.3.5 Post purchase behavior :
Belch, GE and Belch, MA (2007, p, 120-6), Once the consumer has purchased
and used the product, they will evaluate their purchasing decision. They
compare the product's performance with their expectations. If the product does

not perform as expected they will experience post purchase dissatisfaction.

12


MBAVB - FINAL PROJECT – TRAN CAO TUAN

According to Philip Kotler, (2002, p. 208), after purchasing the product, the
consumer will experience some level of satisfaction of dissatisfaction. Marketer
must monitor post purchase satisfaction, post purchase actions and post purchase
product uses.

2.4 Purchase cases :
Robinson, Faris & Wind (1967) have defined buying situation as the industrial
buying behavior of an organization which uses a complicated system depending
on the item needed and buying methods

(2.7)

. There are three buying situations:

new buy, modified re-buy and straight re-buy (2.8)

A straight re-buy refers to a situation in which the buying is a routine action,
conducted by the buying department (for example: raw material). The buyer
chooses a provider from an “approved list”, counting on their satisfaction from
the previous buy. In this situation, the former providers (the chosen ones) try to
maintain their product/ service quality. Those who are not chosen try to offer a
new product or take advantage of the situation in which the buyer is not very
satisfied, thus will be likely to consider buying some of their products or

services. Afterwards they will make efforts to gradually increase the “buying
percentage” of the buyer

Modified re-buy refers to a situation in which the purchaser wants to change the
qualifications, price, delivery request or other conditions. This kind of buying
situation usually relates to the decision of the organization such as changing in

13


MBAVB - FINAL PROJECT – TRAN CAO TUAN

personnel, numbers of staff which has been changed, etc. In this case, the
formers providers will worry and try to find ways to maintain customers. This
buying situation is an opportunity for those providers who “are not chosen”

New buy is the case in which the purchaser buys goods or service for the first
time. The more expensive the expenses or risks relevant to the purchase is, the
more people join the routine and purchase decision.

In sum, there are three types of buying situations, which are new buy, modified
re-buy and straight re-buy. The case for our study is modified re-buy with
changing and without changing is more popular than other situations. Because
End-users and House owners when they build house, they need to contact the
Cement retailers as well as Contractors to get advise. Both of them always use
this material for supply and construction, Re-buy situation is often used.
However, it will be changed to other suppliers because many factors such as
Price, Quality, Services … will be affected to them for making buying decision.

2.5 Influencing buyer behavior

Philip Kotler, (2002, p. 183), the starting point for understanding buyer behavior
is the model shown in the Figure 2.1 above. The buyer’s characteristics and
decision process lead to certain purchase decisions. A consumer’s buying
behavior is influenced by cultural, social, personal, and psychological factors.
Cultural factors exert the broadest and deepest influence.

14