RESEARCH PROJECT (BMBR5103)

ELEMENTS INFLUENCING ON TOYOTA
AUTOMOBILE PURCHASE DECISION OF
CUSTOMERS IN HO CHI MINH CITY

STUDENT ‘S FULL NAME

: PHAM LY THIEN

STUDENT ID

: CGS00018497

INTAKE

: MBAOUMK15A

ADVISOR’S NAME & TITLE

: A. Prof. PHAN DINH NGUYEN

December 2015


ADVISOR’S ASSESSMENT

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ABSTRACT
The main goal of the study was to examine main elements influencing consumer
purchasing decisions in Ho Chi Minh City‟s Automotive industry. The study was instruted
by the following specific goals: to determine the economic factors affecting consumer
purchasing decisions in Ho Chi Minh city‟s automotive industry; to examine the
psychological factors affecting consumer purchasing decisions in Ho Chi Minh city‟s
automotive industry; to examine the social-cultural factors affecting consumer purchasing
decisions in Ho Chi Minh City‟s industry, and; to analyze the demographic factors
affecting consumer purchasing decisions in Ho Chi Minh city‟s automotive industry. The
study concludes that psychological factors, social-cultural factors, economic factors, as
well as demographic factors affect consumer purchasing decisions in Automotive industry
in Ho Chi Minh city.
It was important to understand the little things that consumers use as the basis for making a
judgment of when it comes to purchasing decisions. The study recommends the need for
automobile companies to consider consumers‟ demographic characteristics such as age,
gender, marital status, occupation, education and income when designing the products to
offer into the Ho Chi Minh city market. This is because demography factors are vital
and measurable statistics of a population that helps to locate target market, they are easier
to measure and are suitable for psychographic and socio-cultural studies. Additionally
demographic factors have a huge impact on the assessment of different features which are
generally associated with consumer behaviour.
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CONTENTS
ADVISOR‟S ASSESSMENT
ACKNOWLEDGEMENTS
ABSTRACT

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2.3.1

Perception ......................................................................................................... 25

2.3.2

Learning ............................................................................................................ 26

2.3.2

Related Utilities ................................................................................................ 26

2.4 SOCIAL – CUTURAL FACTORS ...................................................................... 27
2.4.1

Religion ........................................................................................................... 29

2.4.2

Family ............................................................................................................... 29

2.5 DEMOGRAPHIC FACTORS ................................................................................ 30
2.5.1

Gender Differences ........................................................................................... 31

2.5.2

4.1. INTRODUCTION ................................................................................................ 41
4.2. BACKGROUND INFORMATION ..................................................................... 41
4.3. ECONOMIC FACTORS AND PURCHASING DECISION .............................. 47
4.4

PSYCHOLOGICAL FACTORS AND PURCHASE DECISION ..................... 49

4.5 SOCIAL-CULTURAL FACTORS AND PURCHASE DECISION................... 51
4.6 DEMOGRAPHIC FACTORS AND PURCHASE DECISION ......................... 53
4.7. HYPOTHESES TESTING BY MULTIPLE REGRESSION .............................. 58
4.8. CHAPTER SUMMARY .................................................................................... 58
CHAPTER 5. DISCUSSION, CONCLUSION AND RECEMMENDATIONS ........ 59
5.1. INTRODUCTION ............................................................................................... 59
5.2. SUMMARY ......................................................................................................... 59
5.3. DISCUSSION ....................................................................................................... 60
REFERENCES ............................................................................................................. 70
Appendix 1: English questionnaire ............................................................................. 73
Appendix 1: Vietnamese questionnaire ....................................................................... 78

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1.0 INTRODUCTION
1.1 BACKGROUND TO THE STUDY
Consumer behavior is regarded to be that particular the action which an individual takes in
the process of purchasing and using products and services. This process also includes the
mental as well as the social processes which come before these actions. It means therefore
that one of the biggest challenges facing businesses is the process of predicting and
understanding consumer behavior. At present, the competitive market forced producers to
produce goods based on customer needs (Tafler, 2014). The study of consumer purchase

say that that the main functions of the products are not essential. However it simply means
that the contemporary duty of a product is more when compared to its basic use-value. In
most cases, consumers do not rate products in relations to their core attributes but,
rather according to the so-called real product as well as the extended product, which
simply represents a set of intangible factors, which confer a desired perceived advantage

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on the consumer and which includes; image consultancy, and after-sale service (Foret
& Procházka, 2009).
Consumer buying behavior is often unconsciously affected by some factors. For instance
social factors play an essential role when it comes to the decision of buying certain
products, including the most sensitive products such as cars. The important social factors
are: reference groups, family, role and status. There are four important psychological
factors affecting the consumer buying behavior: perception, motivation, learning and
beliefs and attitudes. The economic factors that most commonly affect consumer behavior
include occupation, economic situation and personality (Blythe, 2009).
Successful businesses are well aware of how to leverage the different factors that
influence consumer buying behavior in order to effectively market their products
and as such maximize sales. Studies have revealed that there are generally four main
factors that play a role in the consumer's buying behavior. The factors include cultural
factors, social factors, personal factors and psychological factors (Blackwell et al., 2001).
This study therefore sought to explore of the four main factors that influence consumer
buying behavior of the automotive.
A study done by Havkinze, Roger & Kenth (2009) was able to establish that the
consumer‟s disposable income is indeed very essential when it comes to determining what
to buy and in what quantities, however this mostly depends on the income elasticity of a
certain product. In the event that the consumers disposable income increases and that the
income elasticity of demand for that good is greater than one then the proportional rise in

pick-ups and heavy commercial vehicles.
The main brands category from Toyota Vienam sold in Ho Chi Minh City are; Corolla,
Toyota 86, Yaris, Vios, Camry, Innova Fortuner, Prado, Hilux, Hiace and Land Cruiser.
Toyota Vietnam employs approximately 1,900 employees in the various branches Data
from the Vietnam Automotive Manufacturers Assosiation (VAMA) shows that Toyota‟s
market share is more than 50 per cent.
1.2 PROBLEM STATEMENT
The behavior of the consumer with regard to purchase of automotive is affected by various
factors that are uncontrollable; cultural, social, personal and economical and psychological
factors. These factors cause consumers to develop products and brand preferences.
Although many of these factors cannot be directly controlled by marketers, understanding
of their impact is essential as marketing mix strategies can be developed to appeal to the
preferences of the target market (Ahmed and d‟Astou, 1993).
Today‟s competitive world chance of survival of automotive companies is related to
continually providing its customers‟ satisfaction and to attract their loyalty and support.
Knowing the factors that unconsciously affect the decision to purchase something can
have positive effects on supplying the customers with better products. Consumer behavior
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means more than just how person buys products. Marketing efforts therefore also focus on
consumer‟s consumption of services, activities and ideas. The manner in which consumer
buys is extremely important to marketers. It involves understanding the set of decisions
(what, why, when, how much and how often) that consumer makes over the time (Hoyer
2004). It is important to know how consumer reacts towards different product features,
price, and advertisement, in order to ensure strong competitive advantage (Khachaturian
and Morganosky, 1990) and (Ahmed and d‟Astou, 1993).
Toyota is no exception for every potential buyer has to consider various factors before a
purchase of their product. For the company to remain competitive in the motor industry in
Vietnam; there is need for the management to understand their customers buying behavior

for long term Usage.
The thesis aims to understand buying behavior of people in HCM City by studying their
decision making process and type of buying behavior.
This thesis will conduct studying any influence both positive and negative that may
impact on purchasing decision of Toyota Cars.

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Understanding relationship between main factors affecting customer Toyota Cars purchase
decision is an important role for both Automotive developers and enterprises to satisfy
customers‟ demand and to have available strategies in the Automotive field.
1.4.

RESEARCH QUESTIONS

Currently, in the term of Toyota Car purchase decision of customers, the research
questions of the thesis are raised as two following questions:

What are main factors influencing on Toyota Car purchase decision of
customers in HCMC. ?
How is impact of these factors on Toyota Car purchase decision of
customers evaluated in HCM context?
Understanding relationship between main factors affecting customer purchase decision is
an important role for Toyota firms to satisfy customers‟ demand and to have available
strategies in the Automotive field.
1.5.

SCOPE OF STUDY


Minh city. It included a target market of people ranging from ages 19 – 60 who have
disposable income to spend on Automobile vehciles, it targeted both walk in clients and
existing clients.

The limitations of the study was the fear of ananymity on the side of the respondents. This
was however eliminated by the assurance that the study was for academic purposes and
that the findings was not to be shared to any other party.
1.6 DEFINITION OF TERMS
1.6.1 Consumer buyer behavior
This refers to the multi-step decision-making process people engage in and the actions
they take to satisfy their needs and wants in the marketplace (Kotler, 2008).
1.6.2 Economic Factors
According to Brassington (2011), economic factors include among others; the level
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of income, credit availability, attitude towards spending, liquid assets.
1.6.3 Socio cultural factors
Social cultural factors include a number of factors that characterize the relationships and
activities of a group of people within a particular set environment (Jones, 2007).
1.6.4 Psychological factors
The term psychosocial refers to the psychological and social factors that influence mental
health (Smith, 2009).
1.6.5 Demographic Factors
This includes age, occupation, family size and family life cycle and sex of the individual
(Kotler, 2008).
1.7 RESEARCH STRUCTURE
This chapter provides a background of the problem followed by the statement of
the problem. Thereafter, research objectives are provided, followed by significance of the
study in that order. Chapter two will provide literature review organized in terms of the



CHAPTER 2. LITERATURE REVIEW
2.1 Introduction
In this chapter, literature is reviewed based on research objectives. To start with,
reviewed relevant literature relating to the economic factors affecting consumer
purchasing decisions in Ho Chi Minh City‟s Automotive industry then the
psychological factors affecting consumer purchasing decisions in Ho Chi Minh city‟s
motor vehicle industry as well as the social-cultural factors affecting consumer
purchasing decisions in Ho Chi Minh city ‟s Automotive industry and finally the
demographic factors affecting consumer purchasing decisions in Ho Chi Minh City‟s
Automotive industry.
2.2 Economic Factors Affecting Consumer Purchasing Decisions
2.2.1 Level of Income
One essential economic factor that influences consumer buyer behavior is income. This
mainly because the amount of goods bought by a consumer as well as the type bought
differs depending on the wage which a consumer earns. In the event that a buyer has
greater income, chances are very high that such a consumer will go for more luxury
goods like high- end cars. Taylor (2011) is of the opinion that a reduction in income
shifts purchasing behavior from buying normal goods to inferior goods. This simply
means that as consumers buy fewer specialty items, such as shoes and clothing, and
buy more store-brand items.
Mogridge (2009) posits that the main essential concept when it comes to consumer
buyer behavior is that the average person of a given income level is likely to spend a
given quantity of money on the purchase of cars. He therefore goes ahead to argue that
there is a function which gives, for every income level, as well as an average
expenditure on a car purchase. More recent studies that have been conducted in this
area have shown that there is a positive relationship between income levels and vehicle
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willingness to spend more on vehicles (Bloom & Sevilla, 2014). Therefore, the income
level moderates the relations between consumers behavior towards purchase decisions
of motor vehicles.
Gronmo (2008) has opined that individuals who are not able to fulfill their primary
needs, especially regarding self-esteem or self-actualization, are likely to compensate
these desires through alternative means.This

means

therefore

that

low-income

households, or those facing racial or ethnic discrimination, are more or less likely
spend heavily on socially visible products so as to make up for their lack of status in
society. In the event that traditional indicators of social status, such as wealth or
occupational prestige, are not accessible, people will without doubt resort to the
consumption of status products that are easily seen as symbols of a higher class (Fontes
& Fan, 2006).
2.2.2 Interest Rates
Interest rates are among one of the most influential factors when it comes to purchasing
decision for consumers. This is mainly because financial contracts for consumer
durables are mainly made up of multiple terms and conditions that include a price
(interest rate) as well as a payment period, which therefore makes it unlikely that the
financial costs of different contracts are exactly the same. Dasgupta, Siddart & SilvaRisso (2009) carried out an analysis of the behaviour of consumers with regards to
the choice of the funding method for automobiles (Banerjee, 2010).
They were able to compare the credit and leasing options. This study revealed
that consumers are very myopic and will therefore prefer contracts that come

likely to prevent pricing errors. The pricing technique used by most retailers is
cost-plus pricing. This involves adding a mark-up amount (or percentage) to the
retailers cost. This simply involves charging the amount suggested by the manufacturer
and usually printed on the product by the manufacturer (Jones, 2007).
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A well-chosen price needs to be able to achieve the financial goals of the company
such as profitability. It should also fit the realities of the marketplace while at the same
time support a product's positioning and be consistent with the other variables in the
marketing mix. Price is largely influenced by the type of distribution channel used, the
type of promotions used, and the quality of the product. Price therefore needs to be
relatively high if costs incurred are high, distribution will without doubt be exclusive,
and the product is supported by extensive advertising and promotional campaigns. In
this regard therefore a low price can be a viable substitute for product quality, effective
promotions, or an energetic selling effort by retailers (Jobber, 2010).
In Turkey, Alper & Mumcu (2009) carried out an estimate on the demand for new
automobiles using quarterly data on price, quantity, quality, country of origin, and
product characteristics of the new automobile sales market demand during the period
1996-1999. He therefore established that the demand for new automobiles is price
inelastic in the short run. Similarly, Zhan & Vrkljan (2013) in South-Western Ontario
carried out a study on the older drivers‟ (70-90 years old) perceptions of vehicle safety
and how they influence their vehicle purchase.
The findings revealed that safety was superseded by other purchasing considerations most notably, price. Price was therefore identified and emphasized as the key
factor that influenced vehicle purchase decisions. Fuel efficiency, which participants
considered in their overall cost of the vehicle, was also listed as an important
consideration in the vehicle purchase decision process.
East (2014) argues that in traditional economics prices are simply treated as a cost.
This is because the recognition that a price merely serves to inform the consumer about
the good is more of recent origin. Price, one of the non-product attribute of brand

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A study carried out by Hawkins & Mothersbaugh (2010) was able to show that
perception begins with consumers‟ exposure and attention to marketing stimuli and
thereafter ends with their interpretation of the stimuli. Etzel, Walker & Stanton (2014),
on their side believe that consumers‟ perception is not only determined by the
characteristics of the stimuli, but it is also determined by the characteristics of the
consumer him or herself. It is therefore important for that marketers obtain a
thorough understanding of their target markets as well as how consumers will perceive
various marketing-related stimuli.

For example, Etzel et al., (2007) argues that the four elements of the marketing mix,
namely product, place, distribution and promotion, are likely to influence consumers‟
perceptions of the business, and therefore their selection. Manning & Reece (2007)
also opines that customers are likely to perceive the product‟s value on the basis of its
benefits which, in turn, is greatly influenced by the product‟s performance, features,
quality, warranties, packaging as well as labelling.
2.3.1.1 Perceived Quality
In Ho Chi Minh City markets, customers look for product quality and features that will
satisfy their needs. For example a vehicle is no longer seen to be just a means of
transport but has to emphasis on safety, durability, among other features like space,
seating capacity, 4WD or engine power and reliability among other features. The
massive literature has emphasized on actual quality and this has gone further to
conspire against what we describe as the neglected frontier of quality: an outside-in
perspective driven through the customer-centric perception of quality by intrinsically
dealing with the voice of the customer. The perception of the consumer regarding
quality of products has its own distinct definition and form of measurement. It
therefore goes a long way to touch on subjectivity, and is the level of perceived value
reported by the customer who benefits from a process or its outcome (Cronin &