The Effect of Country-of-Origin on Customer Purchase Intention: A Study of Functional Products in Vietnam

Abstract

This paper examines key determinants and the effect of country-of-origin on customer's purchase intention of functional food and dietary supplement product in Vietnam. Exploratory study was identified to evaluate personal and social factors on customer's buying behavior. Twenty-eight reflective constructs were adapted from literature and designed by using a seven-point Likert scale to facilitate measurement. By using non-probability convenience sampling, data was collected from a survey of 242 Vietnamese who have experienced in buying functional and supplement food. This paper employed partial least square structural equation modeling (PLS-SEM) as a technique employed to analyze the measurement and structural models. The findings provide evidence that social prestige customer perceives and their positive attitude toward functional food which are main factors influencing on consumers' purchase intention. Customer's perceived prestige plays an important role in decision-making process to purchase. The higher social prestige taken up in consumers' mind, the higher consumers' purchase intention is. Moreover, the more positive attitude customer holds toward functional food, the higher consumers' purchase intention. The research results provide useful information in current understanding of what antecedents determine factors influencing customer's intention to purchase functional food and lead to managerial implications for business strategies.

1. Introduction

In the modern society, health is one of the central values. Consumers are increasingly aware that food influences health condition (Young, 2000). This growing consumers’ awareness together with progress in various fields of science provides companies with opportunities to develop a range of new functional products. The objective of the developers of a technical product is to combine the obtained knowledge about the consumers’ requirements with the knowledge of what is technically possible (Kraus & Popek, 2013). Healthy nutrition is essential to prevent diet-related chronic diseases (Choi & Zhao, 2014; Goetzke & Spiller, 2014; Jebb, 2007) so that functional food became increasing important. It is due to the long-term changes in the society, as well as socio-demographic trends. It is related with the rising costs of health care, steady increase of life expectancy and the fact that the elderly is interested in the improvement of their quality of life (Roberfroid, 2000).

Functional foods and nutraceuticals are defined as products (Diplock et al., 1999) that are demonstrated to affect beneficially one or more target functions in the body, beyond adequate nutritional effects, in a way that is relevant to either improved state of health and well-being and/or reduction of risk of disease’. Social country-of-origin factors such as: social prestige, social animosity and norms are also one of the important factors needed for the acceptance of functional food, especially for foreign product (Verlegh, 2007; Yang, 2014). An important motive for consumption of functional food is the level of consumer animosity and the belief of good health the product promises to bring, which form the attitude toward functional food consumption (Oh & Jeong, 2015; Yang, 2014). This paper aims to examine how consumers’ purchase intention of functional food is jointly influenced by consumers’ perceptions of the individual and social country-of-origin factors where functional food products derive from.

2. Conceptual Framework and Hypotheses Development

This study proposes a comprehensive model that encompasses how country-of-origin factors affect purchase intention. Apart from that, the model identifies other 4 factors: belief, consumer animosity, attitude, and time limited pressure to determine customer’s purchase intention. Based on the conceptual model and literature review, eleven hypotheses have been articulated to describe the relationships between the driving forces behind customers’ purchase intention.

2.1. Consumer’s Belief on Purchase Intention and Attitude toward a Product

A belief is a descriptive thought a person holds about something (Pollay & Mittal, 1993). A person seems to hold a distinct and specific opinion about various aspects of any product’s brand which affects their intention to buy products of that brand (Oh & Jeong, 2015). Besides, depending on the strength of customer’s beliefs, purchase intentions of product vary greatly. Customer with positive beliefs about a brand have strong purchase intentions for that brand’s product, while those negative beliefs tend to be reluctant in making purchase decision (Jabeur, 2015). Following these arguments, it has been postulated that:

H1: Belief about product quality is positively related to purchase intention of customer for functional food and dietary supplement product.

Zeithaml (1988) defined a belief about product quality as a consumer’s judgment about a product’s overall excellence or superiority. Based on this definition, we define beliefs about product quality as a consumer's judgment about the overall excellence or superiority of brands. Furthermore, past research shows that brands associated with different markets elicit distinct and different beliefs of product quality (Papadopoulos & Heslop 1993). Brands from emerging markets tend to have a net negative COO effect because emerging countries are associated with unfavorable country attributes such as poor product quality (Liu & Johnson 2005; Rosenbloom & Haefner 2009). Based on these arguments, it has been posited that:

H2: Belief about product quality is positively related to attitudes towards the brand from an emerging country.

2.2. Consumer Animosity on Attitude toward Product and Purchase Intention

Besides, Klein et al. (1998) defined consumer animosity as “remnants of antipathy toward a country related to previous or ongoing military, political or economic events”. One’s animosity toward a country, including war animosity and economic animosity, can lead to negative attitude toward a product from the focal countries (Nijssen & Douglas 2004; Huang et al., 2010). Thus, based on these previous studies, we propose that:

H3: Consumer animosity is negatively related to attitudes towards the brand from an emerging country.

H4: Attitudes toward brand from an emerging market are positively related to purchase intention.

A prominent member among the factors contributing to judging the quality of products and services originating in foreign countries is consumer animosity. To be more specific, consumers who hold high level of grudge or feel animosity towards a foreign country are likely to denigrate its products and refuse to purchase them (Phau et al., 2010). In addition, Shimp et al. (2004) suggested that animosity towards foreign countries would often stem from the lingering influence of past war. Thus, consumer animosity of customer has a significant negative effect on purchase intention of Japanese products. So based on these viewpoints, we propose:

H5: Consumer animosity is negatively related to purchase intention.

2.3. Relationship between Customer Attitude and Purchase Intention under Time-limited Pressure

Weber et al. (1987) once stated that time-limited pressure is a concept that significantly relates to information load of an object. More importantly, Pavi and Nowlis (1999) showed that when people are forced to make a choice, there can be some responses to deal with time-limited pressure. One of them is that consumers may change their decision-making strategy under time-limited pressure. Thus, under timelimited pressure, decision makers often accelerate their decision-making process, speed up their strategy or change their decision making tactics. So based on these possible outcomes when an object is put under time-limited-pressure, we propose:

H6: Under time-limited pressure, the relationship between attitude toward the functional food and purchase intentions for that product is enhanced.

2.4. Social Prestige on Purchase Intention and Social Norm

As stated by previous researcher, consumers often use possessions to formulate and alter their own identities, in order to fit their own projections of who they are and aspire to be (Hung et al., 2011). Some individuals consume product of any brand for the symbolic meaning (Truong et al., 2008, p. 191) it communicates to the society where that individual is living in. This is particularly apparent when the purpose of a luxury brand purchase is to signify wealth, trade up in social status, and/or seek approval (Danziger, 2005; Nueno & Quelch, 1998; Silverstein & Fiske, 2003). All of the above support for the idea that external factor like perceived social status (social prestige) will stimulates individuals’ intention to purchase a product. So we propose that:

H7: Social prestige associated with a brand of market from developed country is positively related to purchase intention.

Steenkamp et al. (1998) once defined brand prestige as a relatively high social status associated with a brand. If a consumer perceives that her or his relevant others hold a positive view related to brands from a given country, she or he may be likely to choose that brand in order to obtain social approval or reward (Batra et al., 2000) and vice versa. Because functional food brands from developed countries such as: US, Japan, Korea is seen as prestigious. So that we propose social prestige will be positively related to perceived social norms regarding brands from developed country (Yang, 2014).

H8: Social prestige is positively related to social norms regarding brands from market of developed country.

2.5. Social Animosity, Social Norm and Purchase Intention

According to Yang et al. (2014), social animosity refers to a set of individual’s negative perception toward a country where a product comes from, which is define as social animosity in this thesis. Social animosity is in fact an expanding definition of customer animosity, because society is a group of individual. And because brands can signal group belongings and differentiation, in order to be a part of a national group, the individual may be forced to show her or his allegiance to the group by displaying public acts of disapproval towards groups (i.e., countries) that are not considered friendly or competent. Hence, a consumer may avoid buying brands from countries that are deemed to be rivals by their relatives and relevant others. Thus:

H9: Social consumer animosity is negatively related to social norms regarding brands from markets of developed country.

According to Klein et al. (1998, 2002), Animosity is defined as antipathy related to previous or ongoing political, military, economic, or diplomatic events. It is proved to affect consumers' purchase behavior. Specifically, it has a direct, negative effect on consumers’ purchase behavior. Besides, a case study conducted by Ettenson and Klein (2005) have pointed out that Chinese consumers' animosity toward Japan was related negatively to their willingness to purchase Japanese products. And more important, this effect was independent of their judgments about the quality of Japanese product. Based on these arguments, we propose:

H10: Social consumer animosity is negatively related to purchase intention of customer for functional food and dietary supplement product.

Yang (2014) defines social norms as one’s perceived unidimensional evaluation of the brands from a country among reverent others. In addition, according to TRA theory, subjective norms reflect a person's belief about whether his or her significant others think that he or she should perform a particular act (Ajzen & Fishbein, 1977). To be more specific, prior papers on social influence suggest that individuals tend to match attitudes, beliefs and behaviors to group norms (Deutsch & Gerard 1955, Kelman, 1958). However, there are two kinds of social influence: informational social influence and normative social influence. Normative influence often results in internalization, which is defined in sociology as the process of acceptance of a set of norms and values established by people or groups (Scott, 1971). Therefore, due to the internationalization process, social norms (positive norms in this context) can influence an individual’s purchase intention. Hence, we propose:

H11: Social norms associated with functional food and dietary supplement products in Vietnam are positively related to purchase intention.

3. Research Methodology

3.1. Operationalization of Constructs

To measure the various constructs, validated items were adapted from prior studies and revalidated for this study. All the focal constructs of the model were measured using reflective constructs that were adapted from literature and designed by using a seven-point Likert scale to facilitate measurement, with a rating scale from (1) “strongly disagree” to (7) “strongly agree.”

The following briefly describes the eight variables used in our models. First, the measurement for belief was drawn from a prior study, which measured the consumer's belief of consequences of buying brands from a specific country (Dodds et al., 1991), it used five survey items that are common in measuring belief as antecedent of attitude and indicator of purchase intention. Second, the consumer animosity construct is defined as consumers’ remnants of antipathy toward a country related to previous or ongoing military, political or economic events (Yang, 2014), the eight-item measurement for this construct was adapted from Klein et al. (1998) study. The third variable uses the threeitem measurement adapted from Dematos et al. (2007) study, which investigated the consumer’s attitude toward buying brands from country. Fourthly, the purchase intention construct is defined as one’s personal action tendencies relating to the brands from a country (Yang, 2014), the three-item measurement for this construct was adapted from Spears and Singh (2004) study. The fifth variable uses the six-item measurement adapted from Beauty (1998) and Lim (2013), and Wong (2009) study, which is the perceived constriction of time available for an individual to perform a given task, it is generated mainly when individuals do not have enough time to find a solution or make a better choice. Sixthly, the social prestige construct is defined as consumer’s perceived social status associated with brands from a country in a product category (Yang, 2014), the three-item measurement for this construct was adapted from Baek et al. (2010) study. Further, the social animosity construct is defined as one’s perceived remnants of antipathy among relevant others toward a country related to previous or ongoing military, political or economic events (Yang, 2014), the three-item measurement for this construct was adapted from Klein et al. (1998) study. And lastly, the social norm construct is defined as one’s perceived pressure from relevant others related to buying brands from a country (Yang, 2014), the five-item measurement for this construct was adapted from Ham et al. (2015) study.

3.2. Survey Administration and Sample

This study employed a survey method, using a questionnaire to test the conceptual model and developed hypotheses. The prospective respondents were chosen randomly. This procedure enabled the researchers to access a sufficient number of prospective participants for this study. We use google online survey platform and then send it directly to each respondent together with an invitation letter to complete the questionnaire. Apart from using this online survey method, we use the former technique of questionnaire administration, which is giving out the questionnaire directly to respondents. The sampling frame of this study consisted of medical clinics, universities, offices. We distributed questionnaire by hand to the respondents in these areas. They completed the questionnaire and handed it to the researcher. A total of 300 were distributed with 242 being returned, expressing a return rate of 80.6%.

Among these respondents, 35% were males and 65% were females. The result shows that 33% of the respondents is at the age of 18-22 year olds, and 67% of respondent is at the age of above 22. Most of respondent have a bachelor’s degree: 88%, the rest have high school diploma or college: 12%. Besides, 53% of respondent whose occupation is office worker, freelancer and some of them have other job, but student takes up 47% of respondent in this survey. The majority of respondent (43%) get a monthly income from 5 to 10 million VND, 42% has less than 5 million per month, 14% has 10 to 15 million, and only 1% has more than 15 million per month. More important, all of the respondent is aware of the existence of functional food and they have knowledge (27%) and experience both using (21%) and having intention to buy it (52%). Finally, among 4 countries that mentioned in this survey for consumer’s choice, US is the most voted country to buy functional food from, Japan come in second place and Korea and China take the third and fourth place. As the result from running pilot survey on 22 respondents indicate all the Cronbach’s Alpha values are more than 0.7, which means the internal reliability and consistency of the questionnaire are confirmed.

4. Results

The research model was tested using the structural equation modeling (SEM), applying a partial least square method (PLS) using SmartPLS 3.0. This technique permits the simultaneous estimation of multiple equations and performs factor analysis including regression analysis all in one step (Hair et al., 2006). The research followed a twostep approach. First, the measurement model was estimated based on the confirmatory factor analysis. Second, the researchers analysed the structural model and estimated the path coefficients, both for the direct as well as for the mediated effects. The focus of the analysis in this study is on predicting what factors related to customer’s purchase intention for functional food and dietary supplement.

4.1. Measurement Model Test

To ensure the measurement model, we employed PLS to assess the psychometric properties of all the scales used in this study. Because all the constructs adapted in this thesis contain reflective indicators, validity and reliability test are necessary (Hair et al., 2014). Each of the indicators are checked whether it is suitable to measure the intended target. Overall, eleven items were eliminated from the scale. To be more specific, two items from Belief, two from consumer animosity, one from purchase intention, three from time-limited-pressure, one from social animosity, two from social norm were removed from the scale. the measurement scale remains twenty-eight items for eight constructs. as shown in table 1, the loadings of all indicators were greater than 0.7, demonstrating convergent validity (Hair et al., 2013). In addition to the composite reliability (CR), the average variance extracted (AVE) of these constructs achieved the cut-off point, indicating a satisfactory degree of reliability with ranging from 0.589 to 0.794. This result indicates that the measurement model has demonstrated an adequate convergent validity (Chin, 1998), see Table 1.

Table 1: Factor Loadings and Composite Reliability of the Measurement Model

Note: CR = Composite Reliability,

AVE = Average Variance Extracted.

The discriminant validity was tested using the Heterotraitmonotrait ratio. All the ratios showed good discriminant validity properties (Table 2). The result of the measurement model indicates that various validity and reliability criteria were satisfied. Therefore, the constructs the constructs and their measures could be adequately discriminated, and appropriated to predict relevance for the structural model and associated hypotheses.

Table 2: Result of the Discriminant Validity Using Heterotraitmonotrait Ratio

Note: Diagonals (in bold) represent square root of the AVE

4.2. Assessment of Structural Model

In PLS, the predictive accuracy of the model was evaluated in terms of the portion of the variance explained. The results suggest that the model was capable of explaining 50.2% of the variance in Purchase intention (PI). Meanwhile, attitude explains 12.7% of the variance in timelimited-pressure (TLP). On the other hand, 10.1% of the variance in attitude (AT) is explained by belief and consumer animosity. Finally, social prestige and social animosity explain 16% of the variance in social norm (SN). Apart from computing the R² value, many experts have come to consider Q² value (the predictive relevance) suggested by Stone (1974) and Geisser (1975), as an extra assessment of model fit. Q² value can be referred to adequacy of the model to foretell the indicators of each latent variable. In regarding to the construct model, values of Q² with larger than zero with respect to a particular reflective endogenous latent construct indicate that the model has a relevant prediction power for that specific variable (Chin, 2010). We run the blindfolding function using Smart PLS, the values of Q² are gained on a 7 omission distance. As the result we get in the table below: the predictive relevance of all the Q² values is larger zero, ranging from 0.064 to 0.414 which shows that the model of path takes advantage of high prediction relevance concerning the all given endogenous variables. In summary, the model exhibited an acceptable fit and high predictive relevance.

Nonparametric bootstrapping was applied (Wetzels et al., 2009) with 2000 replications to test the structural model. The significance of the direct effects specified by the research model was evaluated (Table 3). The results indicate that the effects Purchase intention is influenced directly by Attitude (β=0.474, t=5.455, p<0.), and Social prestige (β=0.185, t=3.12, p<0.002). As a result, hypotheses H4 and H7 are supported. From the analysis, Attitude is influenced directly by Consumer animosity (β=0.177, t=2.843, p<0.005) and Belief (β=0.245, t=2.578, p<0.01). As a result, hypotheses H2 and H3 are supported. Additionally, under time-limited pressure is affected by attitude toward the functional food (β=0.356, t=6.025, p<0.001). Meanwhile, Social norm is influenced directly by Social prestige (β=0.348, t=5.053, p<0) and Social animosity (β=0.204, t=4.137, p<0). As a result, hypotheses H8 and H9 are supported (Table 3).

Table 3: Structural Model Analysis

Note: *** p < 0.001; ** p < 0.05​​​​​​​

5. Discussion

In this paper, the level of customer’s positive attitude for functional food has been identified to have positive influence on customer’s purchase intention toward that product. This result is consistent with previous studies that examined the extent to which attitude affects customer’s behavior (Ajzen, 1991, p.188). For instance, Ajzen proved that the more favorable attitude toward performing a behavior a person is holding, the stronger intention he or she will make to perform the behavior (Ajzen, 1991, p.181). Based on the research findings, besides attitude, customer’s purchase intention is also identified to be positively influenced by the level of social prestige perceived by customer. This finding is in line with previous studies that examined the factor like social prestige stimulates individuals’ intention to purchase a product (Berthon et al., 2009; Tsai, 2005; Vigneron & Johnson, 2004). Also, Tsai (2005) and Vigneron and Johnson (2004) expand the theory by giving out supports and clues contributing to theory: consumer’s perceived social prestige stimulates their intention to purchase a product.

On the other hand, level of consumer animosity as well as level of social animosity toward country where functional food comes from has been confirmed to have no significant influence on customer’s purchase intention toward that product, which contradicts the proposed hypotheses that consumer animosity towards a country engenders reluctance to purchase its products (Phau et al., 2010). One possible reason for their non-significant relationship with purchase intention is because the difference in demographic of survey respondent: the extent of grudge young Vietnamese people hold against country that had military conflict with Vietnam is not sufficient enough to generate feasible effect on decision-making process for purchasing functional food from countries had war with Vietnam before.

Also, belief about healthy effect functional food brings to customer has been identified to have no significant influence on customer’s purchase intention toward that product, which is not in line with the founding of Oh and Jeong (2015) that the beliefs of consumers are somehow very important determinant of its purchase intentions. One possible reason for its non-significant relationship with purchase intention might be the context used to test the construct “belief” in this thesis: In Vietnam, functional food and dietary supplement are still new to people and it does not really take appropriate image in Vietnamese mind. In short, Vietnamese respondent is this survey either choose to use functional food for other reasons but not for the belief of healthy effect it provides or they are indifferent with their purchase intention regardless of their belief about functional food.

In addition, social norm has been identified to have no significant influence on customer’s purchase intention toward that product, which is contradict with theory provided by Yang et al. (2014) and Theory of Reason Action (Fishbein & Ajzen, 1975) stating that purchase intentions are a result of individual attitudes towards the brand and the social norms associated with the brand. One possible reason for its non-significant relationship is the lack of a target brand so that consumer can associate their specific evaluation and assess to what their relatives and friends about that brand.

6. Conclusion and Implications

From the research data analysis and result, we can conclude some reasons why functional food and dietary supplement are consumed slowly in Ho Chi Minh City. According to the research result, the higher social status and prestige taken up in consumers’ mind (word-of-mouth, brand popularity, company’s fame, etc..), the higher consumers’ purchase intention is. Moreover, the more positive attitude customer holds toward the manufacturing process of functional food, its company’s marketing program, product’s packaging, network of distribution, and how the company performs corporate social responsibility, the higher consumers’ purchase intention. To get better understanding about what antecedent influencing factors affecting purchase intention, we look into the positive relationship between customer belief and their attitude, the negative relationship between customer animosity and their purchase intention. Specifically, if customer believe well in the good effects functional food can generate, their attitude toward it will be strengthened and vice versa. Those are partially the reasons why functional food is slowly consumed in market. Therefore, in order to increase consumers’ purchase intention, sellers and investors should:

Improve manufacturing process of functional food to better off customer health. Adjust company’s marketing program to attract customer, leverage the image associated with company brand and products. Besides, incorporate elements of trust and enjoyment within the advertising campaign to gain customer belief and lower their level of animosity. It is vital to increase the social status they perceive. All of which aim to enhance the social prestige and restrain level of animosity society hold onto where functional food comes from.

As any other previous research, this present study also has limitations. First of all, we examine limited factors which influence customer’s purchase intention on functional food. We suggest the next research should consider about other factors that can have significant relationship with customer’s purchase intention we were unable to cover. Second, this research is developed based on 242 respondents, in which 47% of sample was collected from undergraduate students who have relatively limited shopping experience and have a different view on the history and the relationship between counties compared to older age groups. Finally, due to time constraints, only 3 months were given for this research. If the research were extends to a longer period of time, the results may varies. The present study should be replicated using a larger sample size with more focused target respondent and with more suitable questionnaire. In addition, future studies may further test the robustness of this study and investigate other individual and contextual factors that might moderate the effect of social norms on purchase intention.